FCA Investments commits 4 million euros to Yield Fund Uganda

FCA Investments has made its first investments in Uganda.
FCA Investments commits four million euros to Yield Fund, supporting the agricultural sector in Uganda. Picture from the launch event in Kampala on June 27th 2019. Photo: Erik Nyström / FCA

Finn Church Aid founded the company FCA Investments Ltd to boost job creation in developing and fragile countries. Its second investment targets the agriculture sector in Uganda.

Finland invests in small businesses through FCAI

  • Finland will invest 16 million euros in small businesses that create jobs through FCA Investments Ltd (FCAI), a company established by FCA.
  • The loan granted to FCA is a so-called development policy investment.
  • Read more about development policy investments on the website of the Ministry for Foreign Affairs: um.fi/kehityspoliittiset-finanssisijoitukset
Finn Church Aid’s investment company FCA Investments Ltd (FCAI) announced its second investment on Thursday June 27th in Kampala. FCAI committed 4 million euros to the Ugandan Yield Fund, which targets agriculture-related businesses in Uganda across all value chains.

Yield Fund was launched by The European Union (EU), the International Fund for Agricultural Development (IFAD) and the National Social Security Fund (NSSF) in January 2017, and it is also backed by The Soros Economic Development Forum (SEDF).

The fund’s support to agriculture includes supply of agricultural inputs, production and agro-processing within all sub-sectors, post-harvest storage and distribution, but also peripheral activities such as transportation, communications and certification.

“This is a unique opportunity to invest in solid local expertise in the agriculture sector, with strong international support”, says FCAI’s CEO Jukka-Pekka Kärkkäinen.

Yield Fund is a partnership between public and private investors that offer innovative and tailored financial solutions, using equity, semi-equity and debt to small and medium-sized enterprises (SMEs). It has the potential to generate both strong financial returns and significant social impact.

“The model looks at the entire value chain and matches the investment with tailor-made technical assistance. Investee companies can increase production and productivity in a robust manner. This concept is scalable and can be copied to other, even more fragile countries”, Kärkkäinen says.

Investments in agriculture change lives in Uganda

Yield Fund seeks to support businesses with a clear competitive advantage and ambitious local management. The fund will benefit the Ugandan economy by improving an estimated 100,000 rural household livelihoods, and increasing access to markets for an estimated 26,000 farmers.

Emmanuel Obwori, Investments Manager for FCA Investments speaking at the press conference. Photo: Erik Nyström / FCA

Emmanuel Obwori, Investments Manager for FCA Investments speaking at the press conference. Photo: Erik Nyström / FCA

It also creates jobs and employment opportunities, ensures food security while generating income, foreign exchange and new export opportunities – all fundamentally contributing to Uganda’s economic growth and the objectives of the Sustainable Development Goals (SDG).

Investments in the agricultural sector is the surest way of changing lives in Uganda, says Emmanuel Obwori, Investment Manager at FCA Investments.

“Employing over 70% of Uganda’s working population, the agricultural sector is Uganda’s largest employer, but it contributes only 25 percent to the GDP”, Obwori says.

“The agricultural sector is also the least productive, inevitably trapping the majority of Uganda’s population in cycles of seasonality and hunger.”

Grassroots level investments during the next three years

Emmanuel Obwori, Investment Manager for FCAI (left) and Edward Isingoma, Managing Parnter for PCP / Yield Fund. Photo: Erik Nyström / FCA

Emmanuel Obwori, Investment Manager for FCAI (left) and Edward Isingoma, Managing Parnter for PCP / Yield Fund. Photo: Erik Nyström / FCA

To date, Yield Fund has made investments of over 1,9 million euro in SESACO limited, an agro-processing company specialising in soya products, CECOFA, a coffee processor, and Chemiphar, an analytical laboratory providing testing and inspection services to SME businesses.

The fund is managed by Pearl Capital Partners (PCP) Uganda, with the mandate to make investments ranging from 250,000 to 2 million euros. Managing Partner Dr. Edward Isingoma says that PCP’s and FCAI’s ideologies of supporting vulnerable smallholder farmers match perfectly.

“Some of the key principles from which Yield Fund Uganda was established are about the unique, conducive agri-business environment, work against climate change and the potential of bringing about real change in the lives of smallholder farmers and rural communities”, Isingoma says.

By utilizing PCP’s and FCAI’s impact Investing experiences and principles, Isingoma believes that the efforts will also create core foundations from which the SME agri-business sector and smallholder farmer communities can develop and grow together.

“We shall be looking forward to making strategic, effective and efficient on the ground investments over the next three years and are excited at partnering with FCAI not only as an investor, but also in impact measurement, reporting, SME growth capitalization and more.”

Dr. Edward Isingoma, Managing Parnter for PCP / Yield Fund speaking at the launch event. Photo: Erik Nyström / FCA

Dr. Edward Isingoma, Managing Partner for PCP / Yield Fund speaking at the launch event. Photo: Erik Nyström / FCA

FCAI plans more investments in the near future

FCA Investments was founded in 2018 to invest in socially and environmentally responsible businesses that create jobs, raise the income level of low-paid employees, and reduce poverty.

The Finnish Ministry for Foreign Affairs granted FCAI a loan of 16 million euros for investment activities that support this objective. The creation of jobs plays a key role in the fight against poverty and inequality in developing countries. Jobs are also key to sustainable peace.

According to a World Bank estimate, the world should create more than 600 million jobs during the next 15 years in order to give its growing population opportunities for decent livelihoods.

The next investment after Uganda will possibly target Somalia, and as resources grow, investment activities can also be launched in, for example, Cambodia, Jordan, Kenya, Myanmar, and Nepal.

“We have now made two SME fund investments, the other one being in Asia. These investments are important for risk diversification and information sharing”, Kärkkäinen says.

“True impact investors are happy to share the lessons they have learnt and help others so that they do not need to invent the wheel again. The expertise we have teamed with is extremely valuable when entering into environments that are more fragile.“