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Activities of AFD in Uganda - Ambassade de France en Ouganda by chenboying


									March 2009


The French Development Agency (AFD) group has been present in Uganda through its subsidiary PROPARCO since 1993. AFD itself has been developing the Uganda portfolio of activities since 1997 with the creation of a regional agency in Nairobi. Consequently, the group’s activities in Uganda are monitored from Nairobi. Given that Uganda is grouped amongst the LDC (Least Developed Countries), AFD was not authorized to lend or to obtain guarantees from the Ugandan State. This therefore limited the AFD’s sovereign operations to rare grants. Consequently, the group’s visibility in Uganda is primarily through Non-sovereign funding activities in the public and private sector, mainly through PROPARCO. Things have since changed now that the French Government has reviewed its policy and has authorised AFD to resume lending to the Ugandan government or to consider government guarantees as from 2009. 1. AFD Group volume of activity in (M €)
April 2005 13 0,4 0,6 1,2 7,6 3,2 19,4 4,2 11,3 15,2 32,4 11,9 1,3 40,0 59,3 2,3 11,3 1,3 1,3 2,3 8,9 8,1 42,3 2,3 0,0 2005 0,6

2006 -

AFD - Vocational training - Multi sectors - Livestock farming - Environment - Water & Sanitation - Energy - Health PROPARCO - Telecommunications - Tourism Industry - Financial Sector - Mines - Energy AFD Group

2007 17,0

2008 0,0

: Transfer of a project from Ministry of Foreign Affairs to AFD Year of signing funding agreements


Completed projects financed by AFD  Vocational training at the Centenary Rural Development Bank – 350 000€ Approved in 2000 and implemented between 2000 and 2004. The project has enabled the funding of 200 certificate courses (MBA, banking & accounting diplomas), 1,700 short-term courses as well as a course on internal auditing offered by the Center for Financial,

Economic and Banking Studies (CEFEB). The project also facilitated the hiring of an in-house International Consultant to support the Bank’s training department. The said department was created in May 2003, illustrating the durability of the project, as a result, the bank’s training budget has increased considerably. The project has certainely contributed to the current institutional and financial health of Centenary bank, which is the first micro-finance bank in Uganda. The bank has since converted itself to a classic commercial bank whilst maintaining its client portfolio of small-scale businessmen.  Potable water supply in the South Central towns – 3.8 M€ Approved in 1998 and implemented between 1999 and 2004 The project which was carried out by the Directorate of Water, has enabled 9 secondary centres to benefit from operational water sources of quality, installation of storage facilities, a distribution network and several fountains. Boreholes in the surrounding area were equipped with manual pumps. The equipment is managed by the users who contract private companies whilst the Water Directorate regularly provides technical assistance. The project translates to a reasonable reduction of the cost of access to water. This project, along with several others have enabled the perfecting, testing and rendering of the Ugandan Strategy in Water Supply more durable in rural centres, thus making the country a model to emulate in East Africa.  Public Sanitation Equipment in Kampala inner-city areas 3,8M€ Approved in 2001 and implemented between 2002 and 2005 The project supplied potable water and sanitation facilities to about 30 neighbourhoods surrounding Kampala. It enabled the construction of about 34 water tanks in schools, more than 1,000 public ablution blocks, 350 water fountains, 85 renovated or protected sources as well as more than 20 km of water distribution network of which NWSC will be proprietor and thus proposes preferential tariffs to residents who wish to be connected to the network. Training sessions and a study tour to Maputo and Johannesburg have also been funded for Kampala City Council managers. Moreover, an education and information campaign was carried out. This project paved way for the participation of other donors who used the management tools that had been set.  1st debt relief contract and the improvement of the Health Sector – 3.2 M€ Uganda has achieved its completion point with regards to the HIPC (Heavily Indebted Poor Countries) initiative, which was reinforced in 1999, thus enabling the implementation of the French C2D (Debt relief – Development Contract) mechanism for debt refinancing. The first C2D was signed in March 2002 by French and Ugandan authorities. However, the funding agreement took close to 2 years to be signed. The agreement was set to focus on the direct support to specific budgetary lines (basic healthcare and HIV/AIDS). This budgetary grant was disbursed in 3 installments, in March/April 2004 and in August 2005.  Agricultural Cooperation and Structuralisation of Subsidiaries (ACSS) A French Embassy Project, transferred to AFD in 2005


The project aimed at contributing to the implementation of a plan to modernize the agriculture sector by supporting the national strategy on rural organisation, structuralisation of agricultural subsidiaries and the agricultural policy. This was done through experiments on the Dairy Industry in the West of Uganda. The project comprised of 3 elements:  Support to Dairy production organisations in West Uganda;  Support to the structuralisation of the industry at the national level;  Support to inter-professional organisations at the national level. The project was successfully finalised in June 2008. 3.Ongoing projects financed by AFD  2nd debt relief project and the improvement of the health sector – 8.1 M€ Following the 1st C2D initiative, the French and Ugandan authorities signed a second agreement for the period running from 2005/06 – 210/11. The two parties agreed to consolidate the remaining debts that had not yet been repaid, thus allowing the second C2D to amount to 8.1 M€. The second C2D is a sectorial budgetary grant to the Health Sector on condition that the terms of disbursement lie on performance of the Health Sector. However, the funds are not specifically assigned to the health sector but overally contribute to action against poverty funds.  The Bujagali Hydroelectric and Central Dam of 250 MW –12.8 M$ This project is a contribution in the form of a soft loan for the financing of the contruction of the Bujagali dam and the 250 MW Hydroelectric plant. The overall cost of this project is 800 M$ and the AFD Group will contribute 10% of the amount (parallel loan and subordinated loan from PROPARCO of 50 M$). This project will help solve the Ugandan energy crisis by making the access to renewable energy sources less costly than thermal energy. By 2012, it is forseen that Bujagali will contribute close to 50% of energy produced in Uganda and close to 25% of the national energy production by 2020. The funding by AFD incorporates a grant equivalent of 2,8 M$ which will be used to finance additional mesures to alleviate environmental and social impacts caused by the creation of the dam: access to potable water, rural electrification, reforestation of the Nile Banks and the development of Eco-tourism. The dam should be functional in the course of 2011. The full soft loan from AFD was disbursed early 2008. Construction works are in progress.  National Water and Sewerage Corporation – 9.5 M€ This project focuses on the upgrading of two water intakes, in Gaba and Jinja, from Lake Victoria, which will help improve the quality of basic water used in the Kampala and Jinja Water networks. The project will thus reduce the inherent cost of water treatment and improve the quality of water from the network. The funding comprises of a soft loan of 7 M€ to Stanbic Bank of Uganda, unlent to NWSC, along with a 2.5 M€ direct grant to NWSC. The funding agreements have just been signed in February 2009. Works should start very soon.


In addition to these projects, AFD wishes to increase its ARIZ-guaranteed activities portfolio with Ugandan banks. The necessary negotiations are already underway with the main Ugandan Banks. However, no conclusions have been made at this stage. 5. PROPARCO Activities The total amount of ongoing PROPARCO investments in Uganda sums up to 84 M€ and primarily focuses on the Energy sector (Bujagali dam), the Finance sector (credit lines to international and local banks) and companies in the tourism and telecommunications industries.


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