Green, sustainable and inclusive economic transformation 2023-2028

Uganda ranks 166th out of 182 countries of the most climate vulnerable countries in the world. Substantial increases in temperature across the country, significant climate variability, and one of the world’s highest rates of deforestation are all examples of the continued pressure on natural resources, a trend that is projected to worsen. The effects of climate change have devastating impacts on the environment, biodiversity, and the people. Uganda is a country where 70% of the workforce is engaged in rain-fed agriculture. Climate-related challenges are therefore an integral part of fighting poverty and inequality and promoting sustainable development goals in Uganda.

We work on green economic transformation and climate initiatives to create sustainable and inclusive economic growth based on agricultural development. Our efforts focus on the intersection between the private sector, economic growth, and climate. This supports the shared interest of Denmark and Uganda in addressing the global climate crisis. The total budget for green transformation and climate initiatives is DKK 165 million (approximately USD 24 million). The main beneficiaries are smallholder farmers and small and medium-sized enterprises within agribusiness, including refugees and their host communities.

At the Royal Danish Embassy of Kampala, we mainly support the green economic transformation and climate initiatives through four projects from Agriculture Business Initiative (aBi) Finance, aBi Development, International Fund for Agricultural Development (IFAD) and TradeMark Africa. The four projects are described below:

Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM)

ARCAFIM is a regional initiative led by IFAD, aiming to bridge the gap between climate financing and adaptation investment. The Danish contribution of DKK 50 million will support this initiative's efforts in Uganda. This is done focusing on mobilizing international and regional financing for adaptation initiatives by rural smallholders and micro, small, and medium-sized agri-enterprises (MSMEs) in Uganda.

This project strives for increased volumes of international and regional climate finance mobilized for investments in climate-resilient agriculture in Uganda, including production, processing, and exports; ensuring that international standards for climate change adaptation finance are mainstreamed in Ugandan financial institutions; enhanced climate change adaptation capacity for rural women, youth, men, and MSMEs; and supported learning for climate change adaptation investments and replication. Additionally, the project works to build the capacity of the financial and agricultural sectors to utilize climate finance through channels other than ARCAFIM loans, aiming to create catalytic effects in mobilizing climate finance even after the project concludes.

Accelerating Adoption of Green Inclusive Finance

The project is an initiative led by aBi Finance, aiming to create climate resilience and reduce poverty through agricultural finance. Denmark is contributing DKK 20 million from 2023 to 2027. This funding will support the development of new products and systems and build capacity among financial institutions. The project aims to push the financial sector to become more inclusive and greener than it would otherwise be.

The project will provide farmers with financial products and services better adapted to the challenges related to climate change mitigation, adaptation, and the environment. Additionally, the project seeks to expand access to finance for agriculture, specifically targeting women, youth, and refugees who face significant barriers to accessing financial services.

Green and Inclusive Growth in Uganda’s Agri-food systems

Denmark is supporting this aBi Development project with DKK 65 million from 2023 to 2027. The project aims to foster a private sector-driven Ugandan agriculture that is both green and inclusive. The grant will help farmers and agribusinesses build the capacity to adapt to climate changes and maintain productive activities by training smallholder farmers in methods that increase their resilience to climate change while enhancing productivity and quality, strengthening and formalizing linkages between agribusiness processors and their smallholder suppliers, and enhancing the capacity of farmers and processors to better access finance and meet market demands.

Uganda Trade Support Project
Denmark supports the Uganda Trade Support Project led by TradeMark Africa with DKK 30 million from 2023 to 2027. The project aims to enhance the competitiveness and climate resilience of Uganda’s trade and export value chains.

Key activities of the project involve creating, enhancing, and developing Uganda’s institutional trade capacity at the national level. This includes initiatives to reduce transit times from Mombasa to Kampala, costs associated with standards testing, establishing a border market for informal traders at Elegu, and providing training to export firms on compliance and standards, including those related to EU regulations, for example EU Deforestation Regulation (EUDR). This effort is geared towards facilitating more competitive exports and improved market access regionally and internationally for Uganda’s agricultural exports.