The Uganda Business Scene
In this post I will look to give an overview of what is happening from a business perspective in the country of Uganda.
This is written through the lens of evaluating different countries in East Africa as I seek out business opportunities in the region.
To get things started let’s step back and briefly touch upon the big themes at play within Uganda. You can read this introduction for more of the social elements, but for now, let’s get down to business.
It is predominantly geared around the primary sector.
Agriculture makes up almost all of Uganda’s foreign exchange reserves, followed by tourism. This is because Uganda is geographically well placed for both (good climate to grow food, fun animals living there to drive around and take pictures of) and also as it hasn’t seen such high levels of investment in other sectors.
As most GCSE Geography classes will have been taught whilst it’s OK to have an economy that is based on what comes out of the ground, the real development happens once the economy operates more high value functions, in the secondary (manufacturing) or tertiary (services) sectors.
At last count >80% of the population are employed in the agriculture sector
By this I loosely mean the institutions and environment at play to conduct business here.
Being a former British colony means some legacy systems and procedures remain which somewhat grease the cogs of business, especially if coming at it from at UK perspective.
The common law is practiced (rather than civil, which is the French way of doing things), people speak very good levels of English and a lot of hydroelectricity is generated after damming at the source of the River Nile.
From a more logistical point though, the roads are a bit bumpy and the internet can be slow.
From the everyday conversations I’ve had there appear to be some divisions between the population. Not in a racial tension way, more just a general layer of mistrust.
Asking advice around working here, the common response is
“It’s fine as long as you’re working with the right people”
When people say “the right people”, I’ve been told they mean those who share their heritage.
Uganda is made up of over 50 tribes, each with a distinct language and cultural background. As such, some people identify first as being from their tribe, and then as a Ugandan.
People who “aren’t one of us” are more likely to cheat you, which (even if it’s only a suspicion) adds an additional element of complexity to everyday transactions.
I hear corruption occurs, though can’t say I’ve (knowingly) witnessed anything.
The demography of Uganda makes it the youngest in the world, with 69.9% of the population under the age of 25. For comparison it is 46.6% in India, 29.9% in the UK and 22.9% in Japan.
Many of the pressures around job creation for a swelling population exist as they do in other countries in the region. Graduates from the country’s universities are chomping at the bit to enter the workforce but, they tell me, there aren’t always the opportunities to get employment.
Ease of doing business
My task of trying to summarise an overarching metric on “the business scene” was helped immeasurably by the fact that the World Bank really helpfully compiled an index of all of the other important factors around setting up and running a business.
Within this overview of the higher level factors at play within the country, I will now go through some of the things I’ve noticed during my time living and working in Kampala (the capital city). These will naturally have a bias towards the conversations I’ve had and businesses I’ve met, so bear that in mind.
There is a bit of a “start up culture”
… but not a huge one.
Most of the companies I’ve spoken to feel like “proper businesses” (by this I mean they go to an office everyday, deal with physical products and have revenue coming in) however I have heard of a few doing things interesting things within “ICT” (what a “tech business” is called here).
Speaking to the Program Director at The Hive (Kampala’s first hub), he said that he has begun to see many more start up ideas coming through about “governance and justice”. When I probed for examples, he said there were a few platforms emerging to, say, keep corrupt MPs accountable.
A lot of the other burgeoning companies I spoke to and worked with have gone through a program called Unreasonable which is aimed more at taking revenue generating companies, and helping the scale.
Mobile money is present but not ubiquitous
One of the things I’d prepped for when moving to East Africa was mobile money being the de facto way to pay for things. From my time in Uganda, this hasn’t been the case.
When I got my SIM card it was something that came as standard and I noticed the lots of kiosks with the logos of MTN and Airtel (the network providers) on almost every street. In short, the procedure is that you give and receive physical notes at these kiosks, and the person loads it on/ deducts it from your virtual account (via the balance they keep on their own phone), for a fee.
Speaking to (small) business owners, this fee can be prohibitive for the types of transactions that they typically undertake, taking a not insignificant percentage of the total job.
From my experience of trying to transfer a larger amount of money (rent for the month, $200) via mobile money I encountered some problems. Firstly I had to find a kiosk for my landlord’s network (Airtel is the minority) and then I had to find someone who had a balance of $200 on their phone in order to transact.
This proved too much of an ask and so we resorted to my landlord sending a man on a motorbike to pick up the cash.
Working capital is an issue
Talking of cash, I worked on a project interviewing potential customers for a company called Ubuntu Capital who are creating a marketplace for tradespeople. The number one concern for all these customers was reliable access to funds to do their work, especially when a new job came in.
Lack of trust between both parties meant money was never in paid in advance, and there was a lot of inefficiency around drawing upon capital incrementally and generally guaranteeing payment.
Other companies I spoke with for the East Africa Business Podcast cited access to investment/ readily available funds as a blocker for their growth.
Anecdotally, I also got this sense from other dealings I had. The reason my landlord sent a man on a motorbike to collect cash was to allow him to buy furniture for my room. The impetus to get him the rent so I could have a bed to sleep on…
Platforms can provide formal benefits
There appears to be a real problem with certain people not having official records of who they are and what they’ve done.
66% of children in Sub-Saharan Africa don’t have a birth certificate
this prevents a lot of access to the formal economy, such as creating a bank account and other forms of employment, and as such, a lot people remain transacting in the shadows which makes it difficult to engage with the civic provisions of a society.
Personally, this is one of the things I’ve found most staggering from my journey so far: some of the things I’d treated as automatic processes in a country (you have a piece of paper which records that you exist) can’t be treated as a given.
In researching more, I found this presentation about some of the challenges to registering births in Uganda which is an interesting little read if you have the time.
Anyway, coupled with the previous point about access to capital being an issue, if there’s one thing that’s going to deter a bank from giving you a loan at a reasonable rate (even if you can open an account), it’s having no employment record or assets.
Several companies I spoke with were, intentionally or otherwise, providing a route towards creating a legitimate record of a person and their creditworthiness by capturing data about what they have done.
- Tugende: offers financing for motorcycle drivers to own, rather than rent their vehicles, giving them an asset to raise money off and also retaining more of the value
- Ubuntu Capital: looks to provide a reputable employment record for carpenters, welders, and mechanics so they can convert their social capital into financial capital.
- FINCA: explicitly looking at providing financing in the agricultural sector
Low hanging fruit
Whilst I have seen some evidence of innovation, a lot of the opportunities in Uganda seem to be based around getting the capital to implement tried and tested businesses.
There doesn’t seem to be a need to reinvent the wheel when it comes to evaluating the successful enterprises I’ve seen here or the major problems that businesses and consumers are facing. In almost all cases when I’ve asked someone what is their #1 business issue, a company from the Western world has sprung to mind that already solves it.
The opportunity seems to be having the means and motivation to bring a proven business model to the region and customise accordingly.
Give me a steady job
A lot of the people I have spoken to are either seeking a reliable job, or are happy that they’ve got one.
Other aspects of how they spend the hours of 9 to 5 (diversity of role/ excitement at going to work/ company culture) haven’t really seemed to feature in what people mention when we have these types of conversation.
The adventurous aspect to many positions myself and friends from home sought out (develop into a role/ grow new markets/ team outings) doesn’t really register when I speak to people about their careers.
The pinnacle seems to be a sit-down office job, at precisely the time when most of my contemporaries in London are trying to flee theirs
This could probably be to do with the idea of Maslow’s hierarchy of needs though I haven’t given it a great deal of thought.
Either way, from a standpoint of setting up a business in Uganda, it seems that being able to offer someone a reliable job where they can learn skills to secure further safe employment is a surefire way to get people queuing up at your door.
Reading back over this post I felt that the picture was quite downbeat in terms of prospects for setting up a business. However I will say that based purely on my feeling, there is a good local demand for products and services.
Even in the villages I’ve been to there are Ugandan Shillings flowing through the economy, and the malls are flush with local residents (and a solid expat community) paying £2 for a coffee.
Interestingly, KFC is one place that attracts the aspiring middle class which is the inverse of what I modeled in a study on London house prices and density of fried chicken shops.
My time in Uganda has been predominantly spent interviewing businesses (working on projects for a couple), talking to lots of people about the opportunities they see, and generally getting a perspective of things from the neighbourhood I’ve been living in in the capital city.
Out of this I’ve formed an opinion that there are decent untapped opportunities for setting up a profitable business if you put your mind to it, are willing to exercise some patience and surround yourself with good local help. Examples of SafeBoda (Uber for (safe) motorbikes), Jibu (B2B bottled water franchise), and Green Bioenergy (clean energy stoves) demonstrate this possibility.
For now though, I’ll lay to rest my analysis of Uganda as I switch focus to teeing up the next country on my East African tour: Kenya.