WASHINGTON, D.C., June 22, 2010 - The World Bank Board of Executive Directors today approved a US$120 million International Development Association (IDA) credit* to increase agricultural productivity and incomes of participating households in Uganda.
The five-year Agricultural Technology and Agribusiness Advisory Services Project (ATAAS) will also benefit from a US$7.2 million Global Environment Facility (GEF) grant to address land degradation and climate risk issues.
The World Bank financing is only part of the larger total project cost amounting to US$665.5 million, of which the bulk of US$497.3 million will come from the Government of Uganda. The remaining US$41 million will be financed through development partners including IFAD (US$14 million), the European Union (US$20 million), and Danida (US$7 million).
“This project represents the next step in the World Bank's long-standing engagement in the agriculture sector in Uganda which is among the top five priority sectors for public investment in the National Development Plan (NDP). Over 1.7 million Ugandans are expected to benefit from this project directly, and an additional 850,000 indirectly, making this operation of key importance for the structural transformation of the economy through value addition, export growth, and employment,” said Kundhavi Kadiresan, World Bank Uganda Country Manager.
Over the past 18 years, the World Bank, through the IDA has invested in and provided technical support for the institutional development of National Agricultural Research Organization (NARO) and the National Agricultural Advisory Services (NAADS). This project seeks to further improve performance of agricultural research and advisory services that would contribute to increased agricultural productivity in a sustainable and environmentally-friendly manner.
Agriculture accounts for 20 percent of Uganda’s gross domestic product. Though the sector grew at an average annual rate of just 1.3 percent from 2003 to 2008, exports of primary agriculture commodities, which account for over 50 percent of the country’s export revenues, grew 16 percent per year on average over the same period. Agricultural growth remains the important source of poverty reduction in the country.
“Uganda is increasingly seen as a potential breadbasket for East Africa and this project is very timely because it coincides with regional integration initiatives. If Ugandan farmers can increase the quantity of their agricultural produce and at the same time address quality issues, they can tap into the East African market and raise greater revenues,” said Madhur Gautam, World Bank Task Team Leader for the Project.
The ATAAS project will support key activities under five components implemented through NARO and NAADS. The first component (US$138 million) will focus on developing agricultural technologies, including for sustainable land management, and strengthening the National Agricultural Research System. The second component (US$72 million) focuses on enhancing partnerships between agricultural research, advisory services, and other stakeholders; and will be jointly implemented by NARO and NAADS.
The third component (US$318 million), implemented by NAADS, will support improved delivery of demand-driven and market-oriented advisory services to farmers to promote their progression from subsistence to commercial engagement. This will be complemented by the fourth project component (US$63 million), which would promote integration of smallholders in value chains through matching grants, agribusiness services, and market linkages. The last component of project management (US$75 million) will be undertaken by both the NAADS and NARO Secretariats.
Since 1963 when it started its support to Uganda, The World Bank has provided close to US$ 6.5 billion in loans and grants. The Bank has already committed US$1.2 billion to finance various programs and projects between 2009 and 2011. The Bank’s current portfolio in Uganda consists of 18 projects with a commitment of US$1.54 billion.
*The credit is provided on standard International Development Association (IDA) terms, with a commitment fee of 0.5 percent, a service charge of 0.75 percent over a 40 year period of maturity which includes a 10-year grace period.