The National Oil Palm Project (NOPP) is a large Public Private Partnership (PPP) project between the Government of Uganda, International Fund for Agricultural Development (IFAD) and private sector to expand Uganda’s oil palm industry. The structure hinges around the Oil Palm Growers Trust (OGPT) as an intermediary. While the farmers have to-date been financed through IFAD’s low-cost loans, these loans are not sustainable and come to an end after 5 years. It is therefore critical that more sustainable financial products are developed, to cover the working capital and investment capital that is required to sustain and grow the oil palm industry. This will provide the foundation from which farmers can graduate to further services to meet their personal needs and finance other non-farm activities.
FSD Uganda wanted to evaluate the opportunities to provide support to transition oil palm farmers to sustainable, commercial finance. FSD Uganda will catalyse a model which will enable the growth of the oil palm industry beyond NOPP, and generate learnings which transfer to the broader agricultural sector in Uganda and beyond.
Palm Growers Trust as a case study to determine if the current structures, governance, and financing models will work in the long-term. With the ultimate result being a “go / no go” decision on providing further support.
Our process included, Assessment of the Trust’s organizational & technological capacity; A farmer financial literacy survey of 1,800 oil palm farmers; Design of financial products, including mapping of financial institution and investor partners and Synthesis and final recommendations.
Our final recommendations to FSDU were to focus on supporting the scaling up of financial services and products to the Kalangala farmers and to improve financial literacy both for Oil Palm producers and in other sectors under consideration.