AfDB Approves $2m Grant to Strengthen Cotton Value Chain in Northern Uganda

At the processing level, cotton mills and farmer cooperatives will receive technical support to modernise equipment, improve quality standards, and strengthen operational efficiency.

The Board of Directors of the African Development Bank Group has approved a $2 million technical assistance grant to support the Cotton Value Chain Project in Northern Uganda, reinforcing efforts to revitalise rural economies in a region where cotton remains a vital source of income and employment.

The grant, approved on 9 December, is financed through the Fund for African Private Sector Assistance (FAPA), a Bank-hosted multi-donor trust fund that provides targeted technical support to strengthen Africa’s private sector and improve competitiveness. Implementation will be led by Uganda’s Ministry of Agriculture, Animal Industry and Fisheries, in close collaboration with farmer organisations, cooperatives, and private sector actors across the cotton value chain.

Cotton plays a central role in the livelihoods of communities in Northern Uganda, yet the sector has long faced structural challenges. Many farmers contend with low yields, limited access to quality seeds and inputs, weak extension services, poor market linkages, and outdated ginning and processing facilities. These constraints have reduced profitability and discouraged investment, particularly in areas emerging from years of conflict and economic marginalisation.

The project aims to address these bottlenecks by delivering targeted interventions from farm to market. New investments will support farmers to increase productivity through the introduction of improved seed varieties, better agronomic practices, and expanded access to extension and advisory services. These measures are expected to raise yields, improve fibre quality, and enhance resilience to climate variability.

At the processing level, cotton mills and farmer cooperatives will receive technical support to modernise equipment, improve quality standards, and strengthen operational efficiency. The project will also focus on improving coordination and contractual relationships between farmers, processors, and buyers, helping to stabilise prices, reduce post-harvest losses, and increase incomes at the household level.

The initiative is expected to generate wide-reaching socio-economic benefits. An estimated 300,000 smallholder farmers and more than one million people across Northern Uganda are projected to benefit directly and indirectly. Key beneficiaries include cotton growers, women, youth, and workers involved in processing, transport, and trading activities along the value chain.

Dorsaf Zangar-Labidi, Manager in the African Development Bank Group’s Industrial Development, Trade and Investment Climate Division, underscored the project’s people-centred approach. She noted that investing in cotton is not only about boosting agricultural output, but also about restoring dignity, creating jobs, strengthening rural livelihoods, and supporting broader goals such as climate resilience and food security.

Rising farm incomes are expected to enable households to invest more in education, healthcare, and nutrition, while new employment opportunities—particularly for women and young people—will promote more inclusive participation in local economies. The project will also strengthen farmer organisations, improving producers’ bargaining power and access to finance, inputs, and markets.

Sustainability is a core pillar of the project. Farmers will receive training in climate-smart agricultural practices, including soil conservation, water management, and adaptive farming techniques, to help them cope with increasingly unpredictable weather patterns and protect natural resources over the long term.

Expected outcomes include higher cotton productivity, improved lint quality, increased processing capacity, and stronger private sector participation in the cotton industry. By promoting value addition within Uganda, the project will help reduce export of raw cotton, retain more value domestically, and stimulate local industrial development.

Over time, the African Development Bank Group expects the project to contribute meaningfully to poverty reduction, economic resilience, and social stability in Northern Uganda, supporting the region’s transition toward sustainable and inclusive growth.