Delegation of the European Union to Uganda

EU and Private Sector Foundation Uganda respond to COVID-19 impact, promote green investments and decent employment

10/12/2020 - 10:42
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The Board of the Sustainable Business for Uganda (SB4U) Platform has endorsed concrete actions responding to the COVID-19 negative consequences and advancing the Uganda-European Union Roadmap to Improved Investment Climate, in the area of skills development, access to finance and anti-corruption.

SB4U Board Chair, Hon. Dr Elly Karuhanga and EU Ambassador Attilio Pacifici (centre) sign financing agreements

Set up in March 2020, the SB4U Platform is a creation of the Government of Uganda, the Private Sector Foundation (PSFU) and the European Union, to help make Uganda’s business environment more conducive to inclusive and green investment for European and Ugandan companies.

“The EU is progressively upgrading efforts to encourage private companies operating in Uganda to invest green and create decent jobs, particularly for the youth and among them women. Today we launched a Work Readiness Programme that shall enable young graduates to be trained and employed by domestic as well European companies and a series of measures in the area of e-procurement, digital services and corporate governance that shall reduce corruption in economic activities,” said EU Ambassador H.E Attilio Pacifici. 

Ambassador Pacifici noted that additionally and given the exceptionally adverse situation for companies during Covid 19 pandemic, an innovative financial product to support the affected Tourism sector companies has been created jointly by Uganda Development Bank and the European Union as a result of the collaboration of the SB4U members. This financial product is expected to benefit about 200 companies in the short to medium term.

The Board of the SB4U Platform, co-chaired by EU Ambassador Pacifici and PSFU Chairman Hon. Dr. Elly Karuhanga, saw the participation of both Ugandan and European entrepreneurs, as well as of high-level officials from the Ministry of Finance, Planning and Economic Development and the Ministry of Trade, Industry and Cooperatives. 

“The SB4U platform will work as a collaboration tool that can be used in implementation of EU programs in Uganda. As Board members, we were entrusted to strengthen the Uganda-EU economic alliance and focus on how to overcome the different hurdles for investment and trade in Uganda,” said Hon. Dr. Karuhanga. He added: “Equally important was the exploration of new areas of closer cooperation between the European and Ugandan business networks such as digitalisation, green energy and finance, smart agriculture, ecotourism and sustainable exploitation of natural resources.”

Hon. Dr. Karuhanga assured that PSFU had the mandate to bring EU companies closer to the private sector to enforce Uganda-EU bilateral relations to increase trade opportunities and not as a donor recipientThe website of the Platform (www.sb4uplatform.com) was also launched, with aim of providing unique information on Uganda and EU markets and helping respective businesses to link up.

 

 

Background

The Government of Uganda, Private Sector Foundation (PSFU), the European Union (EU) and European companies jointly created the Sustainable Business for Uganda (SB4U) Platform, officially launched by President Yoweri Kaguta Museveni during the first ever EU-Uganda Business Forum held March 9-10th 2020 (https://www.ugandaeuropebusinessforum.com/). The objective of this initiative is to help make Uganda’s business environment more conducive to inclusive and green investment for European and Uganda companies, particularly by ensuring a continued Uganda-EU investment climate dialogue and exploring innovative private-public collaboration initiatives. The initiative also seeks to strengthen EU-Uganda trade and investments links and initiate networking events, joint business missions and partnerships, as well as advancing, monitoring and further elaborating a Roadmap to Improved Investment Climate (https://www.ugandaeuropebusinessforum.com/wp-content/uploads/2020/01/EU-Uganda-Roadmap-to-Improved-Investment-Climate.pdf).

How?

The “Skills & Attitude and Governance & Anti-Corruption (SG+)” Project

The SG+ intervention will be implemented by the Belgian development agency Enabel in partnership with Private Sector Foundation Uganda (PSFU) for a duration of 3 years. The 5 million EUR project is financed by the European Union under the 11th European Development Fund (EDF). This intervention is part of a larger EU program called “Inclusive Green Economy Uptake Programme (GreenUP)”, which contributes to the Ugandan transition toward an inclusive, green and competitive low-carbon economy with the creation of decent green jobs in a number of key sectors, as laid down in the Uganda Green Growth Development Strategy (UGGDS). As far as the Business Environment Component of the GreenUp Programme is concerned, Enable and PSFU will implement two components, namely Skills and Attitude (S&A) and Governance and Anti-Corruption (G&C).

The SG+ general objective is: “To help make Uganda's business environment more conducive to inclusive and green investments through increasing the supply of qualified workers, establishing private sector-led initiatives to fight corruption and strengthening the private public sector dialogue.”

The specific objectives (SO), focusing on each of the two areas of engagement are formulated as follows:

SO 1: Graduates entering the labour market are equipped with adequate skills and attitude leading to further productivity of companies engaged in green economy

SO 2: Practices, evidence-based dialogue and advocacy within the public and private sector are improved to combat corruption

The contribution to the SO 1 will be achieved through the design and implementation of a private sector-led Work Readiness Programme (WRP) allowing to boost the skills and attitude of the young graduates entering the labour market. This WRP will be developed with selected private actors including companies and sectors responding to a set of predefined criteria (e.g. those who are committed to invest in either (1) greening their production technology/operations (reduction of waste, usage of new raw products, etc.), (2) investing in green economy (circular economy, green energy, etc.) or (3) innovation and research. Construction, Manufacturing including Agro-processing and Tourism and Hospitality are the 3 predefined sectors for this project because of their job intensity, anticipated growth potential, present/expected GDP contributions, trade/investments relevance between EU and UGA, climate /green friendly approaches, decent work, gender policy and innovation potentials.

The SO 2 will be based on 4 pillars: e-procurement, digitalization and data integration, fostering corporate governance and the implementation of a private-led corruption reporting mechanism, all of which contribute to improving the business environment. The four components are inter-connected and aim to both foster the prevention of corruption in the private sector and minimize its effect on doing business in Uganda. The intervention will do so, primarily by facilitating information sharing among private sector organisations and with the public sector and the broader public; fostering collective action by introducing tools and building capacity and making the voice of the private sector heard in policy discussions.

A third additional specific objective (SO 3) specifically addressing the socio-economic impact of the COVID-19 crisis in Uganda has been embedded into the intervention (in addition to mainstreamed activities in the 2 first objectives) and will call for immediate actions and support for the benefit of the private sector actors in the targeted sectors.

SO 3: Response to COVID-19 crisis and resilience of private companies in targeted sectors are enhanced. Given the growing importance of the sector in the (post) COVID-19 era also in terms of revenue and job creation (mainly of youth) and its complementary role in other EU supported initiatives (e.g. EU D4D Hub), the ICT and digitalization sector in Uganda has been selected as an additional beneficiary sector of the intervention.

EUD – SB4U Engagement in supporting the Tourism sector.

In April 2020, several meetings were held by EU Delegation to Uganda (EUD) with Private sector Foundation Uganda (PSFU) under the framework of the SB4U platform to discuss about the impact of the pandemic on the private sector operators in the country. Additionally, various meetings between GoU and Private Sector representatives were organized to present a list of measures needed (both fiscal and financial) to support private sector to combat the effects of COVID-19. In line with the priority sectors and measures jointly identified by the private sector and the GoU, the EUD was requested to provide support to the Uganda Tourism sector affected by COVID-19.

Several meetings were held between GoU, Tourism sector associations, Uganda Development Bank Ltd (UDBL) and EUD in order to find a financial solution for the Uganda Tourism sector affected by COVID-19. As a result, it was decided that UDBL will deliver a special financial product (loans with attached grants) to the tourism sector to allow the running of companies affected by COVID-19 and sustain the jobs of the sector. The special financial product (loans with attached grants) designed by UDBL in collaboration with EUD is composed of UDBL own resources (8 Mio EUR approximately) and 6 Mio EUR from EU and aims to support the tourism private sector (hotels, lodges, tour operators, etc).

Objectives of the Loans with attached grants

Given the current cash flow constraints in the sector as a result of the dramatic reduction of visitors, loans with attached grants are required to resuscitate the tourism sector, allow the companies to keep operating and sustain the existing jobs.

More specifically the loans with attached grants will:

1. Provide affordable working capital funds (staff salaries, utility bills, rent, tax/VAT payments, fixed running costs, etc) to the sector tailored to the specific needs of the business.

2. To curtail, reverse and preserve the effects of Covid-19 on the socio-economic impact of the sector (sustaining jobs).

Loans attached to grants

The loan will have a grant component (of up to 40%, declining as per the increasing size of the company) with the following benefits:

  • Concessional loan interest rates not exceeding 13%.
  • Extended working capital tenor of up to 5 years, inclusive of a 2 year grace period;
  • A non-repayable grant to the business.

The grant will be attached to the loan term sheet signed with UDBL. The grant will be provided in addition to the loan amount. Loan term sheet amounts need to be fully repaid by the borrower to UDBL.

The proposed % and maximum amounts of grants are the following:

Category (according to number of employees)

Grant percentage

Maximum Grant amount/Funding (Euro)

5 -20

40%

20,000

20 – 50

35%

30,000

50 – 100

30%

40,000

100 and above

25%

60,000

The Loans with attached grants are expected to benefit above 200 companies in the short-medium term.

 

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