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Investing in food and agriculture, like all investment, carries risks.

How to better understand and manage those risks was the topic of a series of online trainings the FAO Investment Centre delivered to the Uganda Development Bank in September. 

Around 15 staff from the Bank’s Investment, Credit and Risk divisions participated in each of the four sessions.

Agriculture is a strategically important sector for Uganda, accounting for a quarter of the country’s gross domestic product and employing two-thirds of its labour force.

The Bank seeks to become a leading business partner for agriculture and food-related businesses and is working with the Investment Centre, via the joint FAO and European Union AgrInvest project, to boost its agrifood lending portfolio.   

Practical methodology

Didier Nedelec, an FAO Investment Centre consultant who co-led the trainings, said there was a strong investment case for financing Uganda’s agricultural and agro-processing sectors.

“Companies operating in these sectors should create a lot of value in the coming years, and smallholder farmers will benefit from this. But growth requires investments, which by definition involve some risks. For investments to create value, risks should be carefully identified, analyzed, mitigated and managed,” he said.

The Uganda Development Bank’s teams have different backgrounds and experiences. Some are specialized in agricultural and agro-processing sectors. Others are not.

But they all recognize the very specificity of these sectors. That is why it is important the teams develop a consistent and uniform approach for analyzing agrifood projects – from pre-investment due diligence to post-investment monitoring.

During the training, FAO introduced a simple and pragmatic five-step risk management methodology to first identify and analyze the risks, and then accept, mitigate or manage those risks. Uncertainty cannot be eliminated, but risks can be calculated.

The Bank’s Senior Risk Officer Susan Meeme said she was grateful to receive training on the methodology “that we shall implement going forward.”

Unlocking potential

Uganda has one of the world’s youngest and fastest-growing populations.

FAO Agribusiness Investment Specialist Alexandre Kaufmann said that based on projected economic growth and demographic trends, food demand is expected to soar in the region.

“Someone will need to produce all this food,” he said. “Uganda and its farmers clearly have the potential to become the grain basket in the whole region.”

Through AgrInvest, FAO will continue to support the Uganda Development Bank to strengthen its capacity to assess agricultural investment proposals and their risks and to increase agrifood investments.

The ultimate goal is to stimulate economic growth, create decent jobs, especially for women and young people, and improve the livelihoods and well-being of Uganda’s small-scale rural producers.