Financial technology companies (FinTechs) in Uganda are increasingly provide an enabling system for financial service providers through which they move money. 

FinTechs use technology to enhance financial processes, such as facilitating mobile payments, loan provision, bill payments and money transfers, among others.

In the last 10 years, Uganda has experienced rapid growth in financial inclusion, mainly driven by increasing innovations in Fintech and the advent of mobile money.

While the advent of the Covid-19 pandemic has presented opportunities for the fintechs since the lockdowns have compelled many people to shop online, most Ugandan fintechs have failed to take off. In fact, many are not yet attracting the required funding.

Despite Uganda being an entrepreneurial country, Uganda’s fintechs continues to struggle in raising funding recorded to be the lowest in the region.

However, experts list the mistakes that Uganda fintechs do, which keep away customers and funds.


Mr Timothy Mugume, the Jumia Food country lead, says a number of Fintechs are yet to adopt same-day settlement, which presents survival challenges, especially for small capital business given that the ecosystem is heavily reliant on cash flow.

“Most businesses we work with do not have a lot of capital. We must make it easy for customers to pay through our payment channels and also settle with vendors in a timely manner,” he says.

Ms Damali Ssali, a trade development expert, adds that financial technology players and e-commerce innovators must develop platforms that transact in real-time. 

“It is unfair that some informal traders offer credit to big e-commerce and Fintechs then wait for days before a payment is made,” she said, noting Fintechs must embrace the principle of same day transaction settlement. 

Lack of integrity

Ivan Mworoza, co-founder of Akiba, says trust is a hard commodity to come by in any business. It is even harder for fin-tech startups because they are primarily involved with money. Earning the trust of people is a long journey that requires patience but only if you have a great product, are consistent and committed to the long term.

“Fintech is about handling people’s money and when it comes to money, people take time to trust you,” Mworozi says.

Mr Nielsimms Sangho, the Flutterwave country lead, adds that there is need to build trust, noting that as businesses in the financial space, building trust is key for their survival.

Not having scalable products

Shamirah Kimbugwe, the director at Pivot Payments, a fintech firm, most Ugandan startups can only position very well in the market to become an investment destination if they have scalable products.

“The product that is being placed on the market must be bankable. When we say bankable, there are elements, to attract an investor, you need to know whether  the product is scalable, can 1 million people use the product, or is it a product that will have a limited number of users,” she remarks.

Peter Kawumi, the President at Financial Technology Service Providers Association (FITSPA), says the question of why Kenya and Nigeria is perceived to be thriving is a matter of two things; their populations are higher and they have the ability to scale faster in a highly digitised population.

 “Look at Nigeria, its 200 million people, if you do the product right and it fits into the market segment, you can easily reach 30 million customers, and once you reach such numbers, the volumes will allow you to be profitable,” Kawumi notes.

Mr Mark Mukasa,  the data and analytics manager at Digest Africa, says startups should focus on key sectors such as agriculture, energy, healthcare and education since they reflect the areas that contribute to the backbone of Uganda’s economy want to attract funding.

Poor funding negotiations

Fintechs have largely relied on venture capital funding to develop scalable products that can serve across many markets.

But Uganda attracts the least funding for fintechs in venture capital, with Rwanda, Kenya, Egypt, South Africa and Nigeria being the leaders in hedge funds.

Martin Tumusiime, a tech entrepreneur, says the highly technical language used in investment funding negotiations and documentation is a major hindrance.

Tumusiime also notes that while regular entrepreneurs, who have no legal background need lawyers to strike deals, it comes at a high cost, which most startups cannot afford.

Additionally, he says potential investors also ask for impressive financial states, devoid of which, a startup becomes unattractive to investors.

“To get investment for your startup, investors request for an impressive financial statement depicting revenue coming into the startup. If your revenue is not promising, they categorise you as a failing startup, devoid of potential. This means that they will not risk their funding on you,” Tumusiime says.

It should be noted that tech startups, especially Fintechs, largely rely on foreign investors to develop scalable products that can serve across many markets. Thus, increased availability of local and international funding allows startups to access resources from a wide range of stakeholders at different stages of development.

However, John Ndabarasa, the Startup relations associate on the Netherlands Trust Fund Uganda and engagement associate at the International Trade Center, says it is neither too difficult nor too easy to get funding for startups.

According to Ndabarasa, the gist of the matter is that often there is a general mismatch between startup ideas and expectations of potential funders.

“Startups at the ideation stage barely receive money because they are yet to generate revenue. Experts often say money is not everything because many startups have got money and still failed into oblivion.

What startups need to address is the glaring skills gap,” he said.

Kimbugwe says for Uganda to position itself very well in the market to become an investment destination, the fintechs have to invest in flagship products or Minimum Viable Product (MVP).

Ms Kimbugwe adds that a Minimum Viable Product should be bankable and have the ability to attract investors. This means the product can serve a million or more people across different markets. This partly explains why Kenya and Nigeria lead in attracting funding.

 “The irony about venture capital is not simply about bidding for funding, but you need a scalable product, to attract investors. If I have a million dollars, what is my return on investment in two years?” she ponders.   

Lack of cyber risk safeguards

Telecom giants MTN and Airtel Uganda together with Stanbic Bank on October 5, 2020 suspended bank-to-wallet mobile money transactions. This followed a cyber-attack on Pegasus Technologies, a third party aggregator of digital payments. The biggest dent caused by the hack was eroding customers’ trust in digital financial services.

As FinTechs continue to disrupt the financial services sector in Uganda, regulators must be alive to the threats posed by this disruption; as the Pegasus hack has demonstrated.

In the absence of state regulation, should the players be left to operate without any kind of regulation?

Through their umbrella association, the Financial Technology Service Providers Association (FITSPA), FinTechs have come up with an Industry Code of Conduct that all members of FITSPA are expected to uphold. The Pegasus incident and other cyber-fraud attacks that have occurred in Uganda, makes the case for FITSPA as an industry association to take a more active role in compelling its members to implement, test and strengthen their anti-cyber fraud safeguards.

Limited financial inclusion

Despite the commendable strides made by Fintechs, a wide gap remains for women, PWDs, rural populations, as well as the young and urban poor.
Women are particularly disadvantaged because of the digital gender divide. A recent study, conducted in 86 per cent of low-income countries, found that more men own mobile phones than women.
The study also found that 58 per cent of these same countries have a gender gap of more than 5 per cent.

Damali Ssali, a financial inclusion enthusiast, says financial inclusion will only be attained if Fintech operators focus their services and developments to solutions that can help women, PWDs, the low-income earners, the urban poor, the unbanked, the underbanked, as well as the small and medium-sized enterprises.