‘Uganda-based businesses are not aggressive enough’

Mr Shigeru Handa. PHOTO | FILE

What you need to know:

  • The Ugandan start-up ecosystem only managed to raise $5m out of the over $3.191b raised by all African startups in 2023, going by the African Tech Start-ups Funding report 2023. Some believe the sector will stagnate if young companies don’t get the money required to navigate a harsh and competitive market. Ismail Musa Ladu and Rachael Mildred Nabisubi spoke to Mr Shigeru Handa, the Japan International Cooperation Agency (JICA) start-up expert about what Ugandan start-ups should do to be jolted out of the slumber.  

What are you looking to achieve with the entrepreneurship support and development of the start-up ecosystem in Uganda?

Through the Entrepreneurship Support and Start-up Ecosystem Strengthening programme, which is a new project supporting the Ministry of Trade, we can streamline the environment upon which start-ups can grow and thrive.

This technical cooperation project aims to enhance the capacity of start-up ecosystem players through knowledge transfer. We shall work with relevant ministries to establish a policy that supports the startup ecosystem as a whole. This process involves not only discussions with the relevant ministries, but also engagement with the private sector, private innovation hubs and startups.

Note that the first scope of the programme is policy and the second is acceleration programmes. We shall also be drawing workable experiences from JICA programmes such as the Project NINJA (Next Innovation with Japan), launched in January 2020 to promote entrepreneurship, innovation, and creation of new businesses. The objective of this initiative is to strengthen the startup ecosystem in countries such as Uganda.

Who are you looking to work with and what kind of support is in the offing?

We are looking at ensuring that the startup ecosystem is more coordinated. Currently, the ecosystem looks fragmented. So, coordination is important in attracting capital. For instance, we have venture capitalists who are aiming at investing in the future and scalability, but for this to happen the entire ecosystem must operate almost seamlessly.

So, in the beginning, we shall be looking at both technical support in terms of capacity building and also harnessing ground that will attract funding into the start-ups. Ultimately, however, we think the most important thing is to have a predictable policy environment that will not only accelerate this programme, but also scale up startup businesses which are worth attracting investors into the ecosystem.

When we speak of startups that have speed and scalability, we don’t mean those that have been around for the last one or two decades. We shall be supporting tech-enabled startups at the growth stage.

Their business model must be clearly recognisable and their proof of concept shouldn’t be complicated to comprehend. So, those looking to scale up chains across the sector whether in pharmacy, agriculture, health or education with the help of tech and innovation is something we shall be interested in. We need to see tech elements in your startup and how it will help manual operations transform or scale up.

Looking at Ugandan start-ups, what is the biggest problem they are dealing with?

In comparison to Nigeria, where aggressiveness and pursuit of scalability is evident and part of the fixture, here in Uganda I don’t see the same level of push. People here are very nice. I don’t see that strong aggressiveness.

Access to finance remains a significant issue. There are very few credible Venture Capitalists coming in. If you access financing through the banks, the requirements needed are very laborious for many start-ups and all this limits start up growth.

Ugandan start-ups have to compete with more established and attractive markets for the attention and trust of investors, both local and foreign. To overcome this challenge, Ugandan startups should focus on solving local problems that have regional or global relevance.

Why is it difficult for startups to attract venture capital?

Africa as a continent, attracts only one percent of venture capital willing to invest in startups. The start-up ecosystem is not attractive or coordinated enough. If the ecosystem is organised then money will come. This means we have to have good growth stages and we must be accountable at all times including to the investor.  Uganda must develop her financial market. If you look at Kenya and Nigeria, the stock exchanges there are functioning well. This is important in mobilising patient capital that can be acquired to help SMEs.

What can Uganda learn from your experience in Japan?

Government support is important in developing the ecosystem. For the Japanese government, it has been very intentional. There is a lot of goodwill from the government of Japan to grow their startups ecosystem including through financial support. But the policy also plays a very big role.

What is your involvement in the Innovation week?

JICA in partnership with the Ministry of Trade this month rolled out the Entrepreneurship Support and Start-up Ecosystem Strengthening programme to leapfrog start-ups in the country. We think the event is growing and becoming more impactful.

Our intention is to ensure that opportunities for startups better position themselves to harness opportunities that technology and innovation presents. Even with our NINJA start-ups, our focus is to see that all economic sectors are actively leveraging digital and can benefit from new innovations. We present opportunities to exhibit work during the innovation week for startups and SMEs.

We are connected with major investors, incubators, accelerators, Venture Capitalists and private companies. So when we source startups we can engage them in collaboration with the possibility of tapping into private equity capital.