New IFAD-funded oil palm project to raise incomes of smallholder farmers in Uganda

More than 30,800 vulnerable rural households in Uganda will benefit from a $210.4 million project that aims to sustainably increase rural livelihoods by supporting an efficient oil palm industry that complies with modern environmental and social standards.

The National Oil Palm Project (NOPP) will be financed through a $75.8 million loan and $1.2 million grant from IFAD, as well as direct investment of $90.6 million from private sector partners, and another $25.6 million from the Government of Uganda. The beneficiaries themselves will contribute $17.2 million to the project.

The financing agreement for NOPP was signed by correspondence by Gilbert F. Houngbo, President of IFAD, and Uganda’s Minister of Finance, Planning and Economic Development Matia Kasaija.

Agriculture remains the backbone of the Ugandan economy, contributing more than 20 percent of GDP and over 50 percent of export earnings. Based on the socioeconomic impact achieved under the Vegetable Oil Development Project (VODP) and the VODP Phase 2, NOPP will scale up the approach and be implemented in four hubs in the country – Buvuma, Mayuge, Masaka districts, and a fourth hub, yet to be identified.

NOPP aims to support inclusive rural transformation through oil palm investments. It will contribute to the improvement of livelihoods and to the food and nutrition security of rural households.

“We will expect NOPP to continue to scale up the investments and subsequent impacts under VODP2, primarily at the farmer household level but also at the wider community and regional level,” said Lakshmi Moola, IFAD Country Programme Manager for Uganda. “During the NOPP design phase, a number of mitigation measures have been put into place to ensure that the project will continue and consolidate the investments in oil palm with all efforts to ensure the best interventions are instituted with respect to market, environment and social management.”

NOPP will also build strong linkages between smallholder oil palm growers and primary processors, based on the innovative public-private-producer partnership arrangement developed under VODP. The partnership with the private sector will ensure that smallholder farmers have access to quality inputs, technical know-how and investment credit.

IFAD has financed 17 rural development programmes and projects in Uganda worth $1.6 billion, since 1982. The organisation has invested $462.8 million in the 17 programmes, which have directly benefitted more than 5 million rural households in the East African country.