Rehabilitation productive enterprise

The Uganda Development Bank (UDB) and a U.S. contractor will implement the project under the direction of the Bank of Uganda (BOU). The project will be implemented in two phases: Phase I (1986-88) - studies, intensive TA and training, and lending start-up; Phase II (1989-91) - expanded lending, phase-down of U.S. TA and training. The project will provide start-up capital to establish a dual-level system for agricultural investment credit, under which the BOU will on-lend funds to the UDB (through which 65% of project funds will be channelled), Grindlay"s Bank, and, eventually, at least two other commercial ICI"s (e.g., Barclay"s, Standard). Interest reflows, complemented by expected other-donor resources during Phase II, will ensure that the system becomes financially self-sustaining. In all, some 120 loans (averaging $85,000, and totaling $13.9 million) will be made on commercial terms to private enterprises (including co-ops and PVO"s) - e.g., dairy and poultry farms, hatcheries, and feed mills; about 2,000 jobs will be created. Long- and short-term TA and training (mostly via seminars, observation tours, and overseas short courses) in credit management will focus on consolidating two UDB departments into a single agricultural division; developing outreach (branch or mobile) operations and a data collection and processing system; and upgrading loan approval, processing, and administration. Other participating ICI"s will probably receive modest short-term TA and in-country training. A separate TA program will strengthen agricultural enterprises borrowing under the project. An entity, staffed initially by 4 U.S. advisors and 5 or more Ugandans, will be set up to assist enterprises (on a fee basis) with financial analysis, accounting, marketing, etc. This entity will become responsible for project data management functions during Phase II, and by project end, the entity, consisting of 8-9 professionals, will be a financially independent private Ugandan consulting firm, able to cover all TA needs of the sector except those of the largest of the industrial enterprises linked to agriculture. Amendment of 12/16/86 extends PACD by 18 months to 3/30/91, reduces life-of-project funding from $32 to $18.2 million, and adds more foreign exchange credit for private investment in war-damaged agricultural enterprises, and decreases TA for borrowers (entrepreneurial talent and motivation among business owners has been found to be strong) and ICI"s. (PD-AAU-672)