Kampala. FinTech investments such as SafeBoda will propel Uganda into one of the most preferred investment destinations for startups and technology innovations in 2019, according to the Venture Investments Report 2018 authored by WeeTracker, a global tech media platform.
SafeBoda, among other financial technology (FinTech) innovations, according to the report, which focuses on Africa’s technology and startup ecosystem, were the most funded sectors in 2018 and are likely to be the most lucrative sub-sector in the African startup space.
“Joining the race this year along with the investors’ preferred destination are countries [such as] Uganda, Egypt, Ghana and Tunisia. With the ecosystems passing one more year … these are becoming the next ‘new’ stop for investors to pull out cheques,” the report reads in part.
Join the league of tech destinations
Uganda, according to the report, will join the league of startup and tech investment destinations such as Nigeria, South Africa and Kenya, which have in the last five years attracted big ticket tech and startup investments, especially in the FinTech sub-sector.
In 2018, the report indicates, the Africa tech and startup ecosystem, registered good progress, attracting capital funding worth $725.6m in 458 venture investments.
Nigeria outperformed other African countries taking up 136 deals of those recorded in the period. South Africa followed with 107 deals while Kenya came in third position with 73 deals.
FinTech startups received the most investment in 2018, accounting for 40 per cent of total funding raised.
According to Dr Fred Muhumuza, an economics lecturer at Makerere University, investment in FinTechs has become a major driver of economic development given their multiplier effect.
These, he said, have seen growth in payment systems, especially in the banking such as agency banking.
However, Dr Muhumuza said, government has not been helpful in propping up such innovations with focus still hardware industrialization.
“The whole world is developing FinTechs and information technology, so if we could switch it up and promote IT, it would give us the thrust we need instead of putting all our focus on hardware industries,” he said.
FinTechs and startups, such as SafeBoda, have been the largest driver of financial solutions and business innovations on the African continent, accounting for almost 61 per cent of funding, according to the WeeTracker report.
SafeBoda, which was founded in Uganda about four years ago, currently boasts of more than 5,000 boda boda riders, providing transport services within the Kampala Metropolitan Area. The motorbike service, which works through an app, was also recently launched in Kenya.
FinTech companies, according to the report, attracted the highest funding in 2018, making financial technology the most lucrative sub-sector in the African startup space.
“FinTech appears to be the ever-growing sector in Africa, with most of the companies trying to work around payments and remittances,” the report said.
Naspers’ investment in webuycars.co.za, an e-commerce innovation, attracted the largest chuck of funding of Shs351b in 2018 followed by South Africa’s lending platform Jumo’s Deals which attracted Shs249b.
Others were Kenya’s solar power provider D.light, which got Shs244b equity injection while Tanzania’s Zola Electric secured a total of Shs2035b in funding.