Uganda has secured $200 million from the World Bank to help the private sector recover from the effects of the Covid-19 pandemic with an eye on creating more jobs.
The funds, which have been offered through a project dubbed Investment for Industrial Transformation and Employment (INVITE), are expected to support about 260,000 MSMEs, 40,000 of which are expected to be women-led micro-enterprises.
"Larger-size firms will also benefit indirectly, for instance, from financing that will mitigate the risks associated with late payment and nonpayment," reads a Dec. 20 statement from World Bank.
The INVITE project has four components:
i) mitigating the impact of COVID-19, with a focus on the manufacturing and exporting sectors that are driving economic transformation;
ii) creating new productive and transformative assets that seek to mitigate the financial sector’s risk aversion, thereby improving the availability of credit to MSMEs and providing longer-term finance for productive investments
iii) enhancing capabilities in public institutions and private firms; and
iv) implementation support, monitoring, and evaluation.
“The program will provide innovative financing options to MSMEs— for example, financing based on security in the form of invoices— building on the credit standing of off-takers and introducing a product that offers lower risk while fostering liquidity in these difficult times,” said Moses Kibirige, Senior Private Sector Specialist and Task Team Leader.
“This way, MSMEs will receive payment for the goods or services delivered immediately and the cost of credit provided under the project will significantly be lower than current market rates.”
Of the $200m, $96m is a credit from the International Development Association (IDA) while $104 million is an IDA grant, of which $50 million is from the Window for Host Communities and Refugees (WHR).
The funds will help ease liquidity constraints to Micro-, Small-, and Medium-Enterprises (MSMEs) in the manufacturing and exporting sectors, supporting the provision of new loans to this sector, and supporting private sector investment in viable and sustainable supply chains, including Refugee-hosting Districts (RHDs), through local currency financing.
“The innovative products in this project will ease liquidity constraints on MSMEs, particularly those owned by women,” said Mukami Kariuki, World Bank Country Manager for Uganda.
“In addition, gender-disaggregated data, including data on women in refugee or host communities that participating financial institutions will provide will help address the lack of information and constraints that women-led firms face and ensure that intersectional issues of exclusion are sufficiently addressed.”