This section defines what sectors, firms qualify for support; what is meant by a qualifying firm-level plan within which support can be given; it defines what is meant by a qualifying activity and within such an activity what qualifying expenditures can be supported.

The Eligible sectors
This MGF is strictly available for selected subsectors characterized as those in the non-traditional exports and coffee as identified in the Country Assistance Strategy (CAS) and are also part of the high potential sub-sectors in the Uganda Competitive and Investment Climate Strategy 2011-2015. These are;
1. Tourism
2. Grains and pulses,
3. Horticulture,
4. Edible oils
5. Fisheries, and
6. Information Technology/Business Process Outsourcing
7. Coffee

Firms in the manufacturing not directly linked with the above sectors will not be eligible.

The Eligible Firm

Any private business entity, legally established in Uganda and with established business interests in the selected subsectors, is eligible for support. The MGF also supports the informal firms operating in the eligible sectors through their respective associations and to recognize that the vast majority of such firms are not yet officially registered with the appropriate business registration authorities. They too will be helped to grow, but will be encouraged to register, once they reach the level of turnover where income tax, either individual or corporate, becomes payable. In the case of a business entity not formally registered, all contracts entered into between the MGF and the small firm or entity must be made either with an individual firm or a representative business association. MGF also targets women owned enterprises.

No restrictions apply as to whether a firm is locally or foreign owned. Firms may apply for support either singly, or as groups. Parastatals, government entities and government-controlled firms do not qualify. Specifically, firms where the government or a parastatal is the largest shareholder, or has a majority on the board, do not qualify.

Start-up Operations

It is expected that most firms assisted will already be operational. However, the Unit is at liberty to assist start-up operations, with substantial initial investment in the respective business and, as the MGF Manager sees fit, bearing in mind that start-up’s are inherently more risky, in terms of contributing to overall sales growth targets.

General Exclusions

In accordance with the general exclusions applying to all World Bank-funded projects, the MGF does not extend grants in support of activities that support the production of the following: alcoholic beverages, weapons, tobacco and gambling.

Eligible activities/services

The MGF offers matching grants for the purchases of services eligible for support. Support is for the use of any specialized service, considered by the MGF as likely to make a significant contribution to addressing identified key weaknesses, critical challenges from input supply, production, processing or gaps at firm level. Payments for services may be for service fees and, where appropriate, for associated travel and subsistence costs, incurred directly and exclusively in connection with the delivery of eligible services. A sample list is here below (not exhaustive):
i. Installation of standards and specific sector standards including ISO and HACCP
ii. Accessing technical assistance
iii. Branding
iv. Training in management,
v. Business plan preparation,
vi. Marketing and market access (local and international markets)
vii. Record keeping and improving financial management
viii. Improving production techniques
ix. Improving post harvesting techniques
x. Introduction of techniques in order to improve quality along the sub-sector value chain.
xi. Support to sub-sector business associations will also be provided
xii. Branding and marketing the Uganda BPO Industry.
xiii. BPO specialized software and hardware support.
xiv. Professional certification support.
xv. Support for last mile connectivity to the National Backbone Infrastructure.
xvi. Capacity Building to orient graduates into BPO and attain professional certification.
xvii. International standards acquisition support.

Non- Eligible Activities

• Purchases of goods, heavy production equipment and civil works, even if exclusively required for the activity being assisted, will not be eligible for grant support.
• Similarly, expenditures on internal costs, such as salaries for permanent staff, are not eligible.

Pre-investment Studies

In the particular case of support for pre-investment work the requirement that the plan be realistic will mean that the applicant should demonstrate a capacity to raise the level of funding likely to be required. So, for instance, a promoter of a multi-million investment proposal, only himself having actually mobilized financial resources for equity capital of just a few thousand would not normally be worth supporting with a grant.

Group Activities

Group activities covering more than one firm, for instance those sponsored by trade associations or suppliers of services, are supported. Applications are evaluated separately for each individual firm purchasing services with grant support. In particular, so as to ensure commitment by each supported firm, grant support is matched by a direct 50% contribution by each participating firm to the costs of providing group-based services to that particular firm.

Longer Term Experts

The length of time for which an outside expert or consultant is supported depends on the task agreed but should not exceed 12 months. The principle applied is that an outside expert is supported for the time reasonably required to introduce the improvements agreed with his client. He/she cannot be supported if merely maintaining or managing a steady-state situation.

Rules for Applying to Firm-level Grants

Rejections

Outright rejections of applications for grant support is rare. In most cases, client firms are helped by their respective Advisor to ensure that applications are in accordance with the rules set. However, any case of a rejection is communicated directly in person by the Unit staff responsible, giving clear reasons for the rejection, and where appropriate, agreeing next steps with the firm concerned.

Selection of Suppliers for Services

The firm itself agrees and signs the contract for supply of services with the supplier who is required to register on the MGF portal. The firm will as part of its application, propose how it hopes to contract the supplier of services. The MGF Manager and his/her team as part of the review of the application by firms, approves or rejects the proposed mode of selection of the supplier of services. In the event of a rejection of the mode of selection, the MGF Manager conveys this in writing. In normal circumstances, the recipient firm is free to use its usual commercial practices in how it selects its service supplier. However, the unit needs to be satisfied that the supplier selected is competent to supply the service required, and that a genuine arms’-length commercial relationship exists between the supported firm and the service supplier.

Rejections of Mode of Selection

Reasons for rejections of the mode of selection of a supplier includes the following:
a) unsuitability of the selected service supplier proposed on the basis of information provided;
b) previous unethical practices, previous poor performance, failure to disclose information. Where the mode of rejection initially proposed by the recipient firm has been rejected, the MGF Manager may, by exception, require the recipient firm to undertake a new selection process, using an acceptable competitive selection process such as (i) obtaining proposals from at least 3 technically qualified service suppliers; or (ii) using one of the selection methods from those outlined in the World Banks Consultants Guidelines of October 2006.