ABi Finance at a crossroads: balancing strong commercial ...

aBi Finance at a crossroads: balancing strong commercial viability with clear development

objectives

Evaluation report of aBi Finance 2017

Contents

Acknowledgement.......................................................................................................................................................... 3 List of abbreviations ......................................................................................................................................................4 Summary of evaluation questions ..............................................................................................................................5 Executive Summary .......................................................................................................................................................7 1. Introduction .......................................................................................................................................................... 10

1.1 DANIDA and agricultural development in Uganda.............................................................................. 10 1.2 From project to formalisation................................................................................................................. 10 1.3 Macro-Economic Environment............................................................................................................... 11 2. Purpose and objective of the evaluation and methods ............................................................................... 16 2.1. The 2017 evaluation ................................................................................................................................. 16 2.2 Activities .................................................................................................................................................... 17 3. The core products offered by aBi Finance reviewed.................................................................................... 18 3.1. Guarantees ................................................................................................................................................. 20 3.2. Lines of Credit ............................................................................................................................................ 23 3.3. Outreach (gender, green and regionally) .............................................................................................. 25 3.4. Financial Services Development ............................................................................................................ 27 3.5. Other developments during the evaluation period and future possibilities ................................... 28 4. Organisation of aBi Finance .............................................................................................................................. 32 4.1. The Endowment Fund.............................................................................................................................. 32 4.2. Governance of aBi Finance ..................................................................................................................... 34 5. Development effects and M&E ......................................................................................................................... 37 5.1. M&E.............................................................................................................................................................. 37 5.2. Development effects ................................................................................................................................ 39 6. Major findings and recommendations ........................................................................................................... 46 6.1. Findings ...................................................................................................................................................... 46 6.2. Recommendations ................................................................................................................................... 48 ANNEX 1: Terms of Reference.................................................................................................................................. 51 ANNEX 2: List of people met ..................................................................................................................................... 71 ANNEX 3: Portfolio guarantees ? some observations related to aBi guarantees .......................................... 73

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Acknowledgement

We would like to thank aBi Finance for the opportunity to conduct a `deep dive assessment' into the workings of the products it offers, that have obviously made such a difference to so many of their clients, that include farmer organizations and individual farmers in particular as well as Ugandan agroentrepreneurs in general. We were very impressed by the creativity, stamina and resourcefulness of farmers and entrepreneurs out in the country, and appreciate their role in the development of Uganda. We would like to thank them for the time they took to answer our queries and for allowing us a view from the inside of their businesses. We gratefully acknowledge the invaluable assistance of the aBi Finance staff in providing us with a huge amount of information, and in organizing the many interviews and meetings with stakeholders that we had in the course of the review. Our tight and continually changing schedule was not easy to accommodate and keep track of. In particular, Josephine Mukumbya and Ann Marie Mwaka Sabano assisted us greatly, not only with the ever changing programme that required regular rescheduling, but also in the field, connecting us to partner organisations, banks, MFIs, groups, individual clients and entrepreneurs. Carnegie Consult / KIT / Timpoc Consultants Klaas Molenaar Fred Zaal Paulo Luswata Rien Strootman Toon Luttikhuis Jesse d'Anjou

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List of abbreviations

ABDC aBi ALG ALGC BDS BOU CSR DANIDA DCA D-SIB FI FSD FSD Uganda FX GAAP GCEO GDP KPIs LoC LGS M&E MFI MIS NBFI RUSCU SACCO SME TA ToR UCCFS UGX USAID USD

Agri-Business Development Component Agricultural Business Initiative Agriculture Loan Guarantee Agribusiness Loan Guarantee Company Business Development Services Bank of Uganda Corporate Social Responsibility Danish International Development Assistance Development Credit Agency Domestic Systemically Important Bank Financial Institution Financial Services Development Financial Sector Deepening Uganda Foreign Exchange Generally Accepted Accounting Principles General Chief Executive Officer Gross Domestic Product Key Performance Indicators Lines of Credit Loan Guarantee Scheme Monitoring and Evaluation Microfinance Institution Management Information System Non-Banking Financial Institution Rural Savings and Credit Cooperative Union Savings and Credit Cooperative Small and Medium Enterprise Technical Assistance Terms of Reference Uganda Central Cooperative Financial Services Ugandan Shilling United States Agency for International Development US Dollar

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Summary of evaluation questions

Evaluation question

Summarised response

Determine to what extent and how the financial instruments of aBi Finance have impacted on the agricultural lending policies, appetite, efficiencies and culture of participating FIs over time, and the composition and quality of their loan portfolio;

Answered ? FIs have recognised aBi Finance as valuable and relevant and contacted aBi Finance for LoC / Guarantees to engage in agri lending

See section 3.1, 3.2 and 3.3

Determine to what extent and how the financial Answered ? FIs have increased lending, partly instruments of aBi have contributed to increasing because of aBi Finance the volume, depth and outreach of agricultural finance in Uganda, and improving access and See section 3.1, 3.2 and 3.3 utilisation of financial services by beneficiary agribusinesses over time;

Determine to what extent and how beneficiary agribusinesses of financial instruments of aBi have improved their business performance in terms of quality and value of produce and products; sales and profits; production and productivity; net additional income; jobs created over time; and is attributable to their access to financial instruments of aBi Finance;

Answered ? The income of agribusinesses has increased, as well as other indicators

See section 5

Determine to what extent and how the integration of aBi Finance support with aBi Trust interventions at FI and beneficiary agribusiness SME level has influenced FI performance, and beneficiary loan performance;

Answered ? The integration of FSD within aBi Finance makes sense and will align the goals of aBi Finance and FIs.

See section 3.4

Determine to what extent the management, rules, Answered ? The organisational structure worked procedures, of aBi Finance are sufficiently robust and was suitable for aBi Finance, but it is time for and enforced to meet the objectives of the the next steps endowment fund and the aBi Group in the medium

See section 4 future.

Determine to what extent strategy and decision making by Board and management is sufficiently influenced by internal results measurements, evaluations, research, knowledge sharing and national and international best practice.

Answered ? The internal (non-financial) results measurement framework could be strengthened. aBi Finance could move more towards innovations and fintech.

See section 3.5 and section 4

Based on observed trends and analysis, make Partly answered ? Although the direction indicated plausible quantified projections of medium term was not quantified, it is clear that aBi Finance future developments and possible opportunities in should move to FinTech and innovative solutions

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