Green Finance Dialogue Forum | The Future of Finance is Green: Leveraging SMEs for Uganda's Green Growth

Green Finance Dialogue Forum | The Future of Finance is Green: Leveraging SMEs for Uganda's Green Growth

09 DECEMBER 2021 | SHERATON HOTEL, KAMPALA

Background

The Uganda Vision 2040, Uganda Green Growth Development Strategy (2017), and Third National Development Plan (NDPIII) 2020/21 – 2024/25 outline clear commitments to environmentally sustainable and socially inclusive growth that prioritises green job creation, low carbon emissions, and climate resilience.

To achieve these and other targets, financing needs to be mobilised – with a target of US$1.8 billion per year. This funding is expected to be contributed from multiple sources, including the public sector, environmental fiscal reforms and subsidy reforms, sustainable procurement, certification of sustainable production and trade and inclusive green social enterprises, green energy investments and incentives, green innovation and payments for ecosystem services, and international funding (UGGDS 2017). Within this, the banking sector in Uganda must play a central role in leveraging available funding.

Opportunities for banks to align their products and services to the evolving needs of green small- and medium-sized enterprises (SMEs) are expanding. Green SMEs are innovating products, services and processes that place environmental sustainability and social inclusion at their core – offering electric vehicles, transforming waste into energy or textiles, preserving nature for future generations, and much more. This is exemplified by the more than 120+ green SMEs that are currently being supported by the Uganda Green Enterprise Finance Accelerator (UGEFA) as the programme rounds out its second year.

The topic of Green Finance appeared as a major theme during this year’s Annual Bankers’ Conference; government commitments to climate action have been reinforced in the recently passed Climate Change Bill; and various first-movers – including Opportunity Bank, Equity Bank and Yako Bank as UGEFA Partner Banks – have made commitments to expanding their “green” product and service offerings.

This momentum in green finance brings potential benefits of both building a customer base of green SMEs in Uganda – thereby bolstering current SME portfolios – and accessing global green finance flows. Trends in overall green finance flows indicate that global capital earmarked for supporting green investments is expected to expand in coming years, with $867 billion in green finance committed since 2015 (CPI 2020). Global green finance funding sources are gradually expanding capital earmarked for green investments into the private sector, including SMEs, as end beneficiaries (GCF 2016, 2020; GEF 2018; SEED 2020).

These are all positive indicators that the future of finance is green in Uganda, and the future is here – captured in the positive contributions of green businesses to inclusive, green growth in Uganda.

Highlights from the Dialogue Forum

The UGEFA Green Finance Dialogue Forum 2021 celebrated bankable green SMEs and engaged actors to co-create pathways to ensure that all SME finance is green finance as we step into the Uganda’s green future. The Dialogue Forum brought together 130 financiers, policy-makers, enterprise support organisations and green businesses to explore pathways for expanding access to finance and capacity building for green SMEs across sectors.

The forum was fully funded by the European Union and featured:

  • Agenda-Setting Panel to align opportunities for expanding green finance in Uganda’s banking sector
  • Green Business Exhibition and Pitches showcasing environmentally sustainable and socially inclusive products, services and business models
  • Interactive Discussions on collaborative tools and tailored business development support that empowers green businesses to achieve their goals and remain competitive
  • Collaborative Practitioner Lab to co-create the next generation of supportive instruments to enable green business growth and access to finance

Caroline Adriaensen, Head of Cooperation, European Union Delegation to Uganda and Maris Wanyera, Director Debt & Cash Policy, Ministry of Finance, Planning and Economic Development set the scene and mobilised stakeholders to champion the role of small- and medium-sized enterprises (SMEs) in green, resilient and inclusive growth in Uganda.

Esteemed speakers from the European Union, Bank of Uganda, Financial Sector Deepening (FSD) Uganda, East African Development Bank and KfW Development Bank delved into the role of green finance across various initiatives in Uganda to drive investments in environmental sustainability and resilient economies.

In financing environmental sustainability, green SMEs are well positioned to deliver impacts at scale. During two pitching sessions throughout the day, ten UGEFA-supported businesses - Masrcorp Ltd, MICE Uganda Ltd, Volcano Coffee Ltd, ACOID Medicinal Herbs Planting and Processing, Bringo Fresh, Talemwa Holdings (U) Ltd, HS Green Energy Engineering Solutions Ltd, Safeplan Uganda, JKCC General Supplies Ltd, and Just Clean It - were welcomed to the stage to share their journeys and contributions. They called on the audience to take action by supporting green SMEs like theirs through financing, capacity building and more.

These green businesses and others acknowledge that their success is not only due to their own hard work and innovation. A strong support network of Business Advisors and others have enabled them to refine and expand their activities over the years. Five of the 17 Business Advisors working with the UGEFA programme - from Renewable Energy Business Incubator (REBi), REIGN, Ancywax, Challenges Uganda and Blegscope - shared their perspectives on supporting green business development, including the primary challenges and opportunities facing these businesses as they seek to access finance required scale. These advisors attributed core challenges with access to finance in part to SMEs' lack of established financial systems and investment planning required to tap into various forms of financing, including debt finance via commercial banks in Uganda. This access to finance gap is the core focus of UGEFA and its finance-focused business development support with loan matchmaking.

Drawing on the calls to action from both Business Advisors and green SMEs, the Practitioner Lab breakout group sessions in the afternoon engaged participants to identify collaborative pathways to address some of the most pressing challenges facing green SMEs as they look to grow and scale their contributions to inclusive, green growth.

The National Environment Management Authority (NEMA) shared a core challenge they experience with SMEs typically treating environmental compliance as an after-thought. Participating SMEs identified with this challenge, noting the struggles they face in terms of associated costs of environmental compliance and competition in their sector by informal businesses that undermines the perceived value of being environmentally compliant. Joining together, participants identified the need for a solution that expands environmental waivers and certification to green SMEs. This will be achieved by simplifying communication between environmental authorities and SMEs, and expanding efforts to pre-vet "green" technologies that comply with regulations and are relevant to green SME business models in order to reduce bureaucratic burdens associated with reporting documents.

With the leadership of UNFCCC Regional Collaboration Centre Kampala, gaps in access to information for SMEs to learn about climate change adaptation measures can be overcome through the resulting solution of a resource centre. Acting as a go-to place for adaptation strategy building and implementation, this centre would offer trainings programmes and financing for SMEs to learn about effective approaches for adapting their businesses to the impacts of climate change in order to ensure long-term environmental, social and economic sustainability. 

In the group hosted by the Global Green Growth Institute (GGGI) participants shared their perspectives on barriers to increased collaboration between the private sector (particularly green SMEs) and public sector (namely municipalities) for resilient, integrated value chains, taking the example of the waste management sector and the procurement of municipal waste for briquette businesses. The diverse Practitioner Lab participants developed the idea for diversion centres where private and public sector actors can convene to establish waste-to-value value chains by adopting demonstrated technologies, supporting sensitisation, and sustaining advocacy for collaborative waste management markets.

The Uganda Tourism Association (UTA) presented a core challenge in the tourism sector relating to private sector collaboration, for example, expanding opportunities for market synergies between clean energy or transport sectors and the tourism sector. Participating group members designed a solution for a voluntary body as a central convener. This body would be responsible for registering and disseminating information on green suppliers relevant to the tourism sector while taking the next steps to incentivise integrated markets. This solution would be backed by set standards for the tourism sector that clearly define "sustainable/green tourism" in Uganda.

Closing the event, the tremendous momentum that is building to champion the role of green SMEs in Uganda's green growth was celebrated. The UGEFA Green Finance Dialogue Forum audience was commended for valuable efforts by many to expand support for green SMEs and green finance. Closing remarks from UGEFA Partner Banks - Opportunity Bank, Equity Bank and Yako Bank - reiterated that the future of finance is green, and the future is here. As first-movers in partnering with UGEFA, these banks are moving the conversation on green banking in Uganda to the mainstream.

This Green Finance Dialogue Forum is just the beginning. At UGEFA, we are confident that jointly we can drive the transition to a resilient, green economy in Uganda by leveraging SMEs for green growth.

Interested in collaborating? Reach out to us at This email address is being protected from spambots. You need JavaScript enabled to view it. for further information.

You are welcome to explore the full programme here.