Uganda, Kenya firms secure $1m food systems funding

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The United Nations Capital Development Fund (UNCDF), with support from Bayer Foundation, has extended $1m (sh3.717b) in concessional funding to regional firms.

The firms are Omia Agribusiness Development Group Ltd in Uganda, and Kenya’s SokoFresh, and they aim to strengthen regional food systems, support efforts towards food security and achievement of key sustainable development goals like zero hunger.

As part of UNCDF’s Food Systems Innovation Finance Facility (FSIFF), both firms will equally share the $1m capital fund dispensed in local currencies.

Omia Agribusiness will be looking forward to scaling up its agro-extension services to farmers in Northern Uganda, while SokoFresh anticipates to widen its cold storage solutions in the Kenyan market.

The liquidity intends to fix funding gaps within the agro-industry which, despite the credit appetite, its risk portfolio places it at the bottom of financial institutions’ loan book, including banks.

According to Pradeep Kurukulasuriya, the UNCDF’s executive secretary, the investment signals a new approach to development financing, which goes beyond grants.

“Together with Bayer Foundation, we are paving the way for increased capital to flow to companies like Omia and SokoFresh, demonstrating the investment case in last-mile communities and aligning investment capital with the shared food security objectives for Uganda, Kenya and the UN development system,” he says.

With UNCDF’s support, Bayer Foundation’s philanthropic capital has been channelled to support entities that combine commercial viability with measurable social impact. Also, to strengthen, catalyse and unlock additional investment while advancing inclusive market development in underserved communities.

“These inaugural investments demonstrate how philanthropic capital can be used catalytically to strengthen food systems, increase incomes for smallholder farmers, and address structural gaps in agricultural value chains,” said Chitkala Kalidas, the executive director of Bayer Foundation.

The concessional investment aid

Despite growth in Uganda’s private sector credit as illustrated by the finance ministry, from sh1.098tillion in January, to sh1.74tillion at the end of March, much of the credit has covered personal and household loans (sh524b), business, community and social services (sh374b), trade (sh346b), manufacturing (sh160b) while agriculture stands among the footnotes, at sh146b, up from sh100b the month prior, facilitated by the 18.73% lending rate.

The $500,000 loan extended to Omia, bound to be settled according to the local financial market terms, is set to support the expansion of farmer services and market linkages. With the firm currently serving more than 90,000 smallholder farmers, the investment will also propel outreach to over 75,000 extra farmers, including 30,000 women and 20,000 refugees.

“This investment enables us to significantly expand our reach while strengthening farmer incomes, resilience, and food security. Partnering with UNCDF allows us to grow sustainably while deepening our impact in some of the most underserved communities in Uganda. This complements the important support we have previously received from other UN partners, including the World Food Programme,” says Iganachi Razaki Omia, the CEO of Omia Agribusiness.

SokoFresh, whose export-oriented production serves markets like the European Union and the United Arab Emirates confirms that the investment will further its redress of post-harvest losses and limited market access for smallholder farmers through its renown solar-powered cold storage solutions.

“This catalytic financing will enable us to deliver inclusive market access and financial solutions that ensure smallholder farmers have access to reliable markets, prompt payments, and fair pricing,” said Denis Karema, the CEO of SokoFresh.

He also anticipates to spread to the firm’s cold storage and reliable market access to more than 5,000 smallholder farmers annually, contributing to a projected 10% increase in farmer incomes.

As official development aid declines, UNCDF advises that scaling food systems transformation will require greater private capital. Thus, both UNCDF and Bayer Foundation invite new foundations and philanthropies to join the FSIFF, which leverages targeted contributions from development partners and foundations into investments aligned to zero hunger, and extended in the form of loans and guarantees.

Bayer Foundation is projected to catalyse more than three times the additional capital from future private donors to innovative food systems enterprises in low and middle-income countries. In total, the foundation has committed $4.5m to the FSIFF between 2025 and next year, while its social innovation programs have reached more than 14 million beneficiaries in over 30 countries since 2019.