WASHINGTON —The World Bank approved $200 million to help the Government of Uganda mitigate the effects of COVID-19 on private sector investment and employment and to support new economic opportunities, including in refugee and hosting communities.
Of this amount, $96 million is a credit from the International Development Association (IDA) while $104 million is an IDA grant, of which $50 million is from the Window for Host Communities and Refugees (WHR).
The Investment for Industrial Transformation and Employment (INVITE) project aims to create sustainable employment and viable market opportunities by encouraging investment along Uganda’s growth corridors.
This will be done by easing liquidity constraints to Micro-, Small-, and Medium-Enterprises (MSMEs) in the manufacturing and exporting sectors, supporting the provision of new loans to this sector, and supporting private sector investment in viable and sustainable supply chains, including Refugee-hosting Districts (RHDs), through local currency financing.
“The innovative products in this project will ease liquidity constraints on MSMEs, particularly those owned by women,” said Mukami Kariuki, World Bank Country Manager for Uganda. “In addition, gender-disaggregated data, including data on women in refugee or host communities that participating financial institutions will provide will help address the lack of information and constraints that women-led firms face and ensure that intersectional issues of exclusion are sufficiently addressed.”
About 260,000 MSMEs will benefit directly from the INVITE project, 40,000 of which are expected to be women-led microenterprises.
Larger-size firms will also benefit indirectly, for instance, from financing that will mitigate the risks associated with late payment and nonpayment.
The INVITE project has four components: i) mitigating the impact of COVID-19, with a focus on the manufacturing and exporting sectors that are driving economic transformation; ii) creating new productive and transformative assets that seek to mitigate the financial sector’s risk aversion, thereby improving the availability of credit to MSMEs and providing longer-term finance for productive investments iii) enhancing capabilities in public institutions and private firms; and iv) implementation support, monitoring, and evaluation.
“The program will provide innovative financing options to MSMEs— for example, financing based on security in the form of invoices— building on the credit standing of off-takers and introducing a product that offers lower risk while fostering liquidity in these difficult times,” said Moses Kibirige, Senior Private Sector Specialist and Task Team Leader.
“This way, MSMEs will receive payment for the goods or services delivered immediately and the cost of credit provided under the project will significantly be lower than current market rates.”
The program will also enhance the capacity of core public institutions that provide enabling services for private investors such as research, certification, standards setting, data gathering, management and oversight functions.
The project supports the IDA-19 WHR (COVID-19 Sub-Window)’s goals of creating social and economic development opportunities for refugee and host communities, is aligned with the World Bank Group Strategy for Fragility, Conflict and Violence. Moreover, it will implement the policy planning objectives outlined in Uganda’s Third National Development Plan and the priorities identified in the country’s Strategy Note on Refugee and Host Communities.
The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.
IDA is one of the largest sources of assistance for the world’s 74 poorest countries, 39 of which are in Africa.
Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has provided $458 billion to 114 countries. Annual commitments have averaged about $29 billion over the last three years (FY19-FY21), with about 70% going to Africa.