Five Ugandan startups; Volcano Coffee, Uganics Repellants, MScan, Flip Africa and Ori Rides have been featured in the internationally-acclaimed Yale Africa Startup Reviews #YASR30, write SAMUEL KITARA & NAMWANJA LOUIS KIZITO.
Local entrepreneurs, accelerators and ecosystem partners will beam with excitement at the validation this provides for a hub they have long believed in. The Yale Africa Startup Review is a Yale alumni and student-led initiative on a mission to share stories of ingenuity and innovation to attract interested stakeholders to the African startup ecosystem.
The annual publication seeks to feature startups and founders redefining African business through innovation and entrepreneurship. The #YASR30 finalists were selected by a panel of esteemed judges that include leading African venture capitalists - after prior rounds of diligence by the editorial team.
Imagine you are a small-scale coffee farmer in Uganda growing coffee on less than an acre of land. You till your field for three years and harvest a fair crop but are offered a minute $0.67 (Shs 2,500) per kilo at the farm gate by rural middlemen. You can fetch a higher price if you can store and sell it when the price rises, but you lack storage facilities. You also know that you can get a better deal if you could de-hull and dry it, but you lack the technology.
So, the #YASR30 startup, Volcano Coffee, founded by Gerald Katabazi, offers farmers a stable market price based on fair-trade principles through contract farming arrangements that pay premium prices for agreed quality standards.
Volcano Coffee also dries and dehuls the beans to avert post-harvest losses and even offers roasting services to enable the farmers to capture more value and resell their coffee at a higher margin on the export market.
Meanwhile, there are about nine million Ugandans who operate in the invisible gig economy where there are high levels of exploitation. Without consistent income, these youth are unable to access social benefits schemes or mainstream financial services. On the other hand, small businesses rely on word-of-mouth to find talent.
FLIP Africa, another #YASR30 startup co-founded by Abu Musuuza, Neha Pandya and Timothy Laku, is a freelance marketplace where businesses can hire experienced, rated, short-term talent at the click of a button.
FLIP wants to unlock the great potential of the gig economy, while addressing the informality, illegality and exploitation associated with gig work. FLIP offers a revolutionary and scalable solution that not only ensures dignity, accountability and security, but also upward mobility in gig work.
So, what can the country do to ensure these startups become the norm, not the exception? What can we do to ensure that these companies survive and thrive?
A good start would be to rethink the registration and legal hurdles, internet irregularities and tax infrastructure that stifle innovators and entrepreneurs.
The National Information Technology Authority-Uganda (NITA-U) recently started requiring startups to certify with them. Although well-meaning in principle, this process adds extra fees and routine audits to cash-strapped startups without delivering much value. It is a barrier that increases the cost of doing business and discourages aspiring entrepreneurs.
Arbitrary internet shutdowns (such as seen recently) hurt technology startups that leverage the internet payments and social media networks in their business models. When the internet is shut down, the world notices, customers realize that that network isn't reliable and traffic patterns are re-routed. This may affect local startups looking to leverage the internet to scale their services and ultimately make them less attractive to financiers.
The government needs to come up with seed enterprise investment schemes (SEIS), where tax incentives are given to startups that are either raising venture capital or bootstrapping.
The ICT ministry should fund and provide free incubator-type workspaces in all government universities from Makerere to Gulu. In these spaces, aspiring student innovators should have unlimited access to the internet, computers, prototyping tools and drop-in mentors to co-mingle and ideate with.
Uganda youth are brilliant and inventive; they will create their own informal structures and find the resources they need. Such simple steps would go a long way in creating a conducive environment for startups.
The Uganda Capital Markets Authority (CMA) has historically focused on private equity for small and medium enterprises (SMEs) and on listed companies on the Uganda Securities Exchange. CMA should take a more proactive role in helping high-growth local startups by advancing policies like they have done for SMEs; by helping steward resources towards building university accelerators and equipping hubs, in collaboration with the ICT ministry.
Uganda's startup entrepreneurs are ready to build. Authorities can make it easier for them to do so by removing barriers and replacing them with strategic support systems.
Kitara is a co-founder and editor at YASR while Kizito serves as a general counsel for several Ugandan tech startups.