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Agriculture is one of the most powerful tools for reducing poverty.

Agricultural development is one of the most powerful tools to end extreme poverty, boost shared prosperity and feed a projected 7 billion people by 2050.  Growth in the agriculture sector is two to four times more effective in raising incomes among the poorest compared to other sectors. 2016 analyses found that 65% of poor working adults relied on agriculture to make a living. Agriculture is also crucial to economic growth: in 2014, it accounted for one-third of global gross-domestic product (GDP). But agriculture-driven growth and poverty reduction, as well as food security are at risk:  Climate change could cut crop yields, especially in the world’s most food-insecure regions. Agriculture, forestry and land use change are responsible for 25% of greenhouse gas emissions. Mitigation in the agriculture sector is part of the solution to climate change. The current global food system also threatens the health of people and planet: agriculture accounts for about 70% of water use and generates unsustainable levels of pollution and waste. Risks associated with poor diets are also the leading cause of death worldwide. Approximately 3 billion people are either not eating enough or eating the wrong types of food, resulting in illnesses and a public health crisis. Hunger is a challenge for 795 million people worldwide and in 2014, 2.1 billion people were overweight and obese, 62% of them in developing countries. Source: World Bank.

The State Of Agribusiness In Uganda

  • Inadequate supported expenses, ineligible or non-project related expenses, fraud or misuse of funds;
  • Internal control weaknesses or inefficiencies related to budget monitoring and management, cash handling, management of procurement, asset management, compliance with national laws and regulations and management of document storage or filing systems;

The reasons for this dismal situation are poorly understood. It is not just a question of lack of technical and financial capacity by the agribusinesses to manage and turn the project into a success, but also a general leniency and lack of seriousness by Ugandans to respect rules and procedures. Moreover, private as well as public institutions are purposefully kept weak because it suits those in positions of power and influence (founder/owners and managers) to bend the rules to their benefit. In case the misuse or fraud is discovered, these people use their position and patronage network to avoid prosecution. It’s hard to see how this will change any time soon.

This is also the reason why donors are bound to be disappointed again in the future. So should we throw the towel in the ring when it comes to supporting agribusiness and the private sector in Uganda? At Angels compassion SACCO, we are not ready for such defeatism, but instead have decided to take the bull by the horns and get much better at our trade. It is encouraging to see that from the 40% questioned costs across the portfolio of projects, most issues were about reporting, not following guidelines or agreed procedures, poor administration etc. but not necessarily about fraud or misuse of funds. Moreover, the trouble was concentrated in a limited number of agribusinesses At Angels compassion SACCO, we took many steps to meet the challenge, such as:

Agribusiness in Uganda is in a crisis. The case of the Uganda Land Alliance where large fraud and misuse of donor funds was detected, doesn’t stand alone. It is rather symbolic for a much wider trend, as demonstrated by the growing number of non-performing loans in the banking sector, which were partly due to the same problem. Angels compassion SACCO has supported over 150 agribusinesses, many of them farmer organizations and small companies, in the period of 2013-2016 and found that about 40% of them had questioned costs. These were mainly along two lines:

  • We developed a new recruitment system and hired a complete new team under Angles compassion SACCO, which will be supported by financial and business expertise from Micro finance support centre;
  • We are improving our communications with better guidance on what Angels compassion is looking for and how applicants can ask for support. We will be more present at selected forums and meet with the public such as the Seeds of Gold Campaign in “the Daily Monitor News paper”;
  • We developed a much more comprehensive, transparent and accountable loan management system that will be launched early year;
  • We have become very serious about the due diligence prior to contracting and monitoring of activities once the project is up and running. Zero tolerance on suspected fraud cases even if it takes Angels compassion SACCO years in court;
  • We will get involved in every sizeable procurement by the agribusinesses and the capital goods will remain Angels compassion SACCO’s property until the end of the project after which it is handed over to the company, but only if the project was managed well and results were achieved.