Uganda, ADB sign Shs1.8b grant agreement for MSMEs within petroleum sector

Uganda has proven crude oil reserves of 6.5 billion barrels.

The African Development Bank and the Government of Uganda have signed a $500,000 grant agreement for financing of Micro, Small and Medium Enterprises (MSMEs) to boost business linkages on the East African Crude Oil Pipeline Technical Assistance project.

The project’s overall objective is to help develop capacity of local Uganda MSMEs along the East African crude oil pipeline by enabling them to access new market opportunities and building linkages with larger, national, regional and international companies.

The project aims to support inclusive private sector growth and the creation of an estimated 500 jobs along the pipeline.

Through the Fund for African Private Sector Assistance (FAPA), the Bank will contribute $500,000 to the project.

The Government of Uganda through the Petroleum Authority will provide counterpart funding. A similar project is being finalised on the Tanzanian side of the border.

The grant was provided in response to a request from Uganda and Tanzania for assistance in preparing local business communities to be able to retain a portion of the $3.5b investment in the construction of a crude oil pipeline from Hoima in western Uganda to Tanga on the coast of Tanzania, agreed in 2016.

This has recently been followed by the signing of an agreement in September 2020 between the two governments for the project to be undertaken by Total E&P as the lead private sector developer.

The grant agreement was signed on September 17, 2020 by bank’s Acting Senior Vice President and Chief Finance Officer, Mr Swazi Tshabalala on behalf of the African Development Bank, and Mr Matia Kasaija, Uganda’s Minister of Finance, Planning and Economic Development.

“The target is to have at least 100 local micro businesses in Uganda and Tanzania trained to do business on the pipeline project. It is also expected to link at least 70 business enterprises or other relevant business transactions undertaken on the pipeline”, said Mr Shabalala.

“With the increased number of enterprises joining petroleum supplier databases in both Uganda and Tanzania, new job opportunities would also be created for about 500 people”, Mr Kasaija said.

FAPA is a multi-donor thematic trust fund which provides grant funding for technical assistance and capacity building to support implementation of the Bank’s Private Sector Development Strategy. Japan and Austria, and the African Development Bank are active contributors to the Fund, which to date has provided over $69 million to 87 projects in over 38 countries across the African continent.

The FAPA portfolio includes regional and national projects aimed at improving the business environment, strengthening financial systems, building private sector Infrastructure, promotion of trade and development of Micro-, Small- and Medium- Enterprise.

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