Innovation hubs, incubators, and accelerators are not doing enough to help support Uganda’s budding start-up industry, a report shows.
According to the Annual Start-up Survey Report for 2020/2021, the innovation hubs are not helping in terms of skilling and connection to funding opportunities.
“Start-ups require advanced support from the hubs, in areas such as mentorship, funding, training, and capacity-building – their business planning and management skills needed to be sustainably sharpened, to grow to scale, to appeal to Series A and B investors,” the survey reads in part.
“Start-up Uganda, in collaboration with Innovation Hubs incubators, and accelerators, should mobilize international financers to avail credit guarantees, to local and international investors, such that they can comfortably fund Uganda’s budding Start-up Industry,” it adds.
According to the survey, some challenges persist in the start-up ecosystem, including weak linkages (or fragmented start-up ecosystem) among the institutions, uneven access to funding, gaps in skilling of start-ups (at innovation hubs), unequitable access to affordable ICT infrastructure, and low capacity to commercialization of R&D products and services.
“Having start-up activities coordinated under one “roof” will help in harmonizing the duties and activities of all relevant institutions to avoid duplication,” the survey states.
The survey says Start-up Uganda can approach NASIRA, an innovative financial program that supports young, female, and migrant entrepreneurs in Sub-Saharan Africa (NASIRA is present in Kenya).
NASIRA uses guarantees to allow investors (including local banks) to on-lend to underserved entrepreneurs. It targets portfolios consisting of loans to young, female and migrant entrepreneurs.
“The goal of these guarantees is to allow investors (including local banks) to provide loans to groups they normally perceive as too risky. By so-called ‘risk-sharing’ NASIRA reduces the perceived and real risks of lending to vulnerable and underserved parts of the population. It enables and stimulates financing needed for people who want to grow their (micro) business,” it adds.
The survey also found that FinTech companies are dominant (50%) in the economy. Payments constitute the largest area (over 50%) of FinTech in Uganda, followed by banking infrastructure, investment and savings, lending, and markets.
The Annual Start-up Survey also established that the majority (93%) of start-ups were located/housed in the central region, where the breadth and character of the financial infrastructure for investment is promising, complemented by a dominance of telecom infrastructure and marketing systems.
The Eastern Region accounted for 3% of the Start-ups, while the Western and Northern Region, combined, housed 4% of Start-ups in the country.
The Survey learnt that the owners of Start-ups were highly educated and had attained a minimum of a University Degree.