Africa’s start-up ecosystem is booming, but it has also long been dominated by the ‘Big Four’ countries receiving the majority of venture-capital funding and other investments: South Africa, Kenya, Nigeria, and Egypt.
And while Uganda is still relatively unexplored in terms of its potential as a hub for technology and innovative start-ups, many investors now look to diversify risk and search for broader opportunities across the continent.
With a youthful population, rising smartphone penetration, and a rapidly growing ICT sector, our budding business environment could be rife with opportunity for innovative tech start-ups to flourish.
But how do we compare to Africa’s Big Four? And, more importantly, what must be done to accelerate our tech ecosystem into a bold, digitally enabled future?
Africa’s untapped opportunity
While African start-ups attract only 1% of global venture funding, Africa was the only region to record three-digit growth in venture funding in the first quarter of 2022.
Although global venture funding fell by 20% in one year, Africa saw an increase of 150% to hit a record of $1.8 billion.
Our continent seems to have been immune to the global downturn for two reasons. The first is that new digital technologies and innovative start-ups are solving some of Africa’s biggest challenges, such as access to financial services.
Africa’s fintech industry is experiencing unprecedented growth, and according to IMF estimates, “four of the top five highest GDP growth rates in the world are in African countries benefitting from this boom”.
The second reason African start-ups are defying the global decline of venture funding could be a change in risk perception as many of our start-ups are showing strong returns on investment.
The pandemic has served to accelerate the adoption of digital products and services, creating new opportunities for tech start-ups to tap into and fight for a larger share of the global ICT market.
And while Uganda is currently attracting less investor interest compared to the Big Four, many of our start-ups are focussing on building strong business models within the domestic ecosystem before raising investment for pan-African or global expansion.
Uganda has one of the youngest populations in the world, which is one of our greatest assets. Although youth unemployment remains a dire challenge, a young and increasingly tech-savvy generation of dynamic entrepreneurs is hungry for success.
This became clear in 2014 when we had the highest level of early-stage entrepreneurial activity in the world.
Uganda’s success stories
Uganda has many shining examples of homegrown start-ups that have found success in both local and global markets.
Accelerators such as Google’s $50 million Africa Investment Fund are helping innovative start-ups in less well-funded and overlooked African regions, such as Uganda.
SafeBoda was the first to receive investment from Google’s Africa Investment Fund in 2021. After launching in 2015 as Uganda’s first ride-hailing company, it has been the dominant player in the market ever since.
It has also recently expanded to a multi-service super app offering ride-hailing, online shopping delivery, and payment services across Africa.
Accelerator programmes such as the Y Combinator Accelerator, which presents a new model for funding early-stage start-ups, are helping African start-ups access investor networks and strengthen their business readiness before pitching to investors.
Ugandan start-up Numida was the first Ugandan tech start-up to get into Y Combinator after securing $2.3 million in seed funding in 2021.
And because of the demand for quick business loans in Uganda, the start-up boasted an impressive 30% month-on-month growth since receiving seed funding.
Uganda’s bold, digital future
Uganda’s economy is on a clear trajectory towards technological transformation. Although our Internet penetration rate stood at only 29.1% of the total population at the start of 2022, the number of Internet users increased by a significant 15.1% in just the last year.
In 2021, the government also “pledged to double-down on increasing access to broadband Internet and reducing costs of Internet devices such as smartphones and laptops”.
Adding to a rapidly growing Internet population, the ICT sector is also our fastest growing market and will be a key driving force behind socio-economic development and attracting investor interest, as per the government’s 2040 Digital Vision strategy.
Chris Baryomunsi, Minister of ICT and National Guidance, highlighted that he believes “we all have the shared aspiration of seeing Uganda become a hub of technology, innovation and enterprise.
We are already the most entrepreneurial nation in the world; what we need to do is fix the area of innovation.”
To become home to Africa’s most innovative start-ups, Uganda needs to continue expanding ICT infrastructure and initiatives, align and review fragmented policies that discourage investment, and create an ecosystem that fully supports the growth of today’s lucrative digital sectors.
Most Ugandan start-ups are still in the early growth stages, but we already know that our youthful population has an extraordinary entrepreneurial spirit.
By improving their access to technology, they can be empowered to truly participate in today’s digital business environment – and become the African (and even global) success story of tomorrow.