Uganda is edging deeper into the global sustainable-finance arena after Denmark shifted its stake in aBi Finance to Impact Fund Denmark.
The timing aligns with Uganda’s push at COP30 for the world to triple climate-adaptation funding to $120b annually. To appreciate the significance, it helps to understand what sustainability means.
Dickson Ssembuya, the Capital Markets Authority director of research and market development, says sustainability is meeting today’s needs without undermining the ability of future generations to meet theirs.
In finance, this is measured using ESG (Environmental, Social and Governance) metrics, essentially a scorecard showing how responsibly a company or country operates.
Investors closely track ESG performance, and companies with poor environmental practices are considered risky and may be avoided or charged higher borrowing costs.
This shift has transformed global finance: investors controlling more than $33 trillion now prefer environmentally responsible projects, and one major outcome of this trend is the rise of green bonds; loans that fund projects such as clean energy, reforestation, or climate-smart agriculture. Investors favour them because they deliver returns while supporting sustainability.
Uganda, through initiatives such as Vision 2040, Uganda Green Growth Development Strategy, Climate Change Act, and National Climate Finance Strategy, is currently on the journey to building green financing, with the country’s Green Growth Index score rising ahead of many African countries, according to the Global Green Growth Institute.
Thus, the shift to Impact Fund Denmark (IFD) boosts this momentum, with aBi, once a donor-funded initiative, growing into a fully-fledged financial institution helping banks to lend safely to farmers and agribusinesses.
‘For over a decade, Denmark’s investment in aBi has demonstrated what effective development finance can achieve: 2.2 million farmers reached, and 300,000 jobs created. The transition of our shareholding to Impact Fund Denmark represents a strategic evolution,’ says Denmark’s ambassador to Uganda, Signe Winding Albjerg.
On the other hand, Felix Okoboi, aBi Finance chairperson, says the transition reflects aBi Finance’s evolution as a commercially viable investment vehicle capable of attracting institutional capital for sustainable finance.
‘With Impact Fund Denmark’s backing, we are positioned to scale our reach to smallholder farmers and agribusinesses facing climate volatility while strengthening Uganda’s sustainable finance ecosystem,’ he says.
By 2028, aBi wants to contribute $204m to Uganda’s climate goals, support 1.5 million farmers, unlock $109m loan guarantees, and catalyse over Shs1 trillion in green agricultural lending.
Carbon markets
Uganda’s involvement in carbon markets has become central to its green finance strategy, generating more than 33 million carbon credits through projects such as clean cookstove distribution, improved water access, small hydropower installations, reforestation, and community-led restoration. These initiatives cut emissions while creating income streams for rural communities.
This progress has now been strengthened by the National Climate Change Regulations 2025, also known as the Carbon Market Regulations, that offer clear rules for project approval, validation, verification, benefit-sharing, and the international transfer of carbon credits, a step expected to unlock fresh climate finance, boost investor confidence, and support green job creation.
Ian King, the deputy resident representative of UNDP, which supported the creation of the regulation, says that carbon markets offer Uganda a transformational opportunity to attract climate finance, create green jobs, and deliver inclusive growth.
Green cash-strapped
This new clarity matters because, despite strong ambition, Uganda still faces a major financing gap, with the country attracting about $785m in climate funding annually, but only 3.4 percent of it comes from the private sector.
High borrowing costs, with average interests of 21 percent, make it difficult for small businesses to invest in green projects, yet while global investors are eager to deploy trillions of dollars into ESG, Uganda lacks the regulatory tools needed to tap into that capital.
Thus, Ssembuya says that Uganda urgently needs a green bond framework aligned with international capital securities to ensure credibility.
Without such alignment, the country cannot meaningfully access sustainability-focused capital willing to accept lower returns in exchange for environmental impact.
However, CMA notes that it is finalising a framework for green, social, and sustainability-linked bonds.
Uganda has also set up a regulated sandbox, a controlled space where innovators can test financial technologies, including those related to green finance, under regulatory supervision.
Still, practical challenges remain. Issuing a green bond is more complex and expensive because of strict verification requirements.
That is why incentives such as tax reductions, lower withholding tax, and deductions for verification costs should be considered.
Across East Africa, member states have already issued green bonds, showing that the region is moving collectively towards sustainable finance.
Thus, the Danish transfer of shares to Impact Fund Denmark points to the growing international confidence in Uganda’s sustainable-finance direction.
With climate threats intensifying and global capital shifting toward ESG, Uganda stands at a decisive moment.
Completing its regulatory frameworks, strengthening incentives, and scaling credible green projects could position the country as one of Africa’s most attractive destinations for climate investment.