| Guarantees Terms |
| What it is |
A de-risking / credit enhancement mechanism channeled through financial institutions, intended to promote agribusiness and green financing to the agribusiness SMEs exhibiting additionality. The guarantee covers credit risk and is applicable to any activity along the agricultural value chain. |
| Purpose / Additionality |
Enhance access to agribusiness and green finance by agribusinesses through the stimulation of financial institutions’ risk appetites to lend to agribusiness sector and demographics which are credit constrained by reason of,
- insufficient collateral by value and or documentation (chattels, “kibanja”).
- Depth of agricultural financing ordinarily offered by financial institutions such as, medium / longer term financing instead of short term, financing of agribusiness sectors, markets, demographics such as refugees, youths and women and locations excluded by the financial services sector, and increasing the percentage exposure of FI credit portfolio to agribusiness lending.
|
| Minimum Limit / Cover |
|
| Guarantee Fees |
|
| Other benefits |
- Business Development Services at concessional rates if needed
|
| Other conditions |
- Targets – pre- defined minimum number of loans
- Gender – Pre-defined number of loans to women
- Willingness to have a Social Performance Management (SPM) Assessment conducted on the Financial Institution with the view of improving sustainable financing.
- Monthly reporting
|
| Eligibility for Financial Institutions (FIs): |
- Be a licensed financial institution
- Have at least 3% of its loan portfolio dedicated to agribusiness
- Have a branch network outside Kampala
- Able to demonstrate good performance in agribusiness lending
- Filled in application form
|
| Eligibility for SMEs: |
- Must be an agribusiness
- Must have additionality as defined above
- Maximum loan amount – USh 4B
- Any two of the parameters below:
- Permanent staff - Up to 100
- Annual sales – Up to USh 8B
- Total Assets – Up to USh 5B
|
