The Ugandan startup space is riddled with infrastructural and regulatory obstacles, resulting in a high business mortality rate. Despite this, the Ugandan entrepreneurial spirit is going from strength to strength. In the third episode of the Infobip Bipgurus podcast series, our Account Executive in Uganda, Nemanja Kostic, chatted with Stanbic Business Incubator Limited Chief Executive Tony Otoa to unpack opportunities to empower entrepreneurs to build sustainable ventures.
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Ugandan startups are seizing the opportunity provided by mobile technology to offer fresh thinking solutions (to address) many of the country’s challenges. Could you share with us what role the private sector can play in building lasting connections with the startup ecosystems to strengthen its impact on the communities?
I think I’ll approach it from two prongs.
And the first one is: Let’s just talk about SMEs, small and medium enterprises. A lot of them are coming out of your startup system. Think about Safeboda. Think about the likes of Jumia. Or think about all these indigenous startups coming up to provide services to the last-mile guy. Think about Rocket Health, providing medical services to your common guy. This is really transforming. And all of this has been run by the private sector. And it’s very, very interesting to note that the private sector plays a huge role in a lot of these compositions.
Whether the infrastructure is right, we will explore that as we go along. But I think for me, it’s just really acknowledging the role of the private sector in really taking on technology, using it to approach or fit or get to the last mile. I’m talking about the last-mile guy, not your techy people. These startups have found a way of connecting and working with them, either using USSD codes or teaching some of them how to use smartphones.
When you think about Safeboda – and for people who don’t know what Safeboda is – Safeboda is a ride-hailing app. Kind of like Uber, but with motorcycles. The typical guy who uses a motorcycle is not your typical elite. It’s your common guy. Your guy who cannot afford a car, who cannot afford crazy fares of an Uber, but can afford to jump on a bike. So much of a way, the private sector has noticed this and has taken it on to, you know, get to the last mile guy.
Now talk about delivery services. Back in the day, say five or ten years ago, you had to go downtown to get to a crowded place to purchase just one item. Today, you don’t have to do it. You have to tap on your phone and be able to do it, and it’s delivered to you in minutes or hours.
So things have really transformed, and the private sector is really playing a huge role in expanding this, and the actors in this are not your very huge companies. They are your typical small or micro businesses. And it’s quite interesting to see how it’s happening.
Over the last two years, when COVID was really hitting the world, we realized that the gig economy is the thing now. So a lot of young people have realized it’s a great way of making money, a great way of connecting with people and businesses and clients. And using that is a very great resource so they can actually get involved in the overall economy. Back in the day, these were guys who were not overly looked at in the economy. But I guess also for the taxman, this is a very interesting avenue to see an opportunity to go in and look for money and grab thriving businesses out there.
If you look at the managers at the businesses that have grown exponentially over the last three or two years, these are small businesses. These private businesses have taken on digital solutions to make the customer experience worthwhile.
What can governments and municipalities do to raise awareness about the local startup ecosystem? What can they do more than they are already doing?
It starts from policy level. Do our policymakers understand what the digitisation world means or where we’re headed? Let me give you a simple example: We have Facebook banned in Uganda when many businesses operate off Facebook to connect with their clients. Imagine that? It’s a huge amount of businesses. So what happens to these businesses, and where do they go?
Firstly, there must be an understanding of the digitized or digital economy at a policy level. The guys who create all these laws and regulations need to understand that. Secondly, there has to be an appreciation to promote local digital processes or local digitization agendas.
We have ministries of ICT, we have ministries of information technology, but do they really understand these things at the business level? I always laugh whenever I say we have policymakers or guys who create rules for businesses and have never run a business or a kiosk. This is a guy who is deciding on your IT strategy or your digital strategy. And sadly, for many businesses, this comes to hurt them. As I mentioned before, a lot of young people have embraced digitalization as a way of getting their businesses out there. But is the public part of the economy listening to these young people? Do we have cheap internet to make business thrive? That is one thing that must be promoted so that a guy can do business seamlessly.
For many of my brothers who are not Ugandan, this might be a very strange one: When we have elections coming up, we have internet blackouts for a week. Imagine the cost on any business! Or imagine the implications on Rocket Health, which provides medical services? Do we understand the implications of this thing? So, there has to be critical soul searching. There has to be a part where we have a sit down (with) government and the private sector to really understand the intricacies of this thing.
Now, the government is thinking about creating a tax avenue through platforms like Google or whatever media or social media platforms are available. You’re simply stifling a guy just getting his feet into that space when you do that.
Can you tell us more about Uganda Stanbic’s Business Incubator Program? Its vision, the roadmap, and how it transforms the Uganda startup ecosystem?
When you talk about startups or businesses in Uganda, you know, there’s a perception that Uganda is one of the most entrepreneurial countries in the world, if not the most entrepreneurial country in the world. (But, for example,) if you went to the Uganda Registration Services Bureau today, you would (see) over 100 businesses registered. But if you went back the same time next year to evaluate those same businesses, you will find that less than 5% are still alive. So the mortality rate of businesses is high.
That’s why we set up the Stanbic Business Incubator. And when we did that, we began by looking at what we could do to support these businesses. We started with a training program, an enterprise development program. But then we realised training is just part of it. Most entrepreneurs need access to finance, access to markets, and entrepreneurial training. But how do you bring the three pillars together to work for an entrepreneur? And where (does) digitisation come into play? Because if I am a financier, and your problem as an entrepreneur is finance, how do I know you? What data points am I picking out or looking into to understand you and your business to see how we support you?
If you’re talking about the market, there are so many avenues to take your product into. But the problem is, are you visible to those avenues? If you ask a guy, ‘where’s your business,’ he will say, ‘well, my business is somewhere in Kampala.’ Where in Kampala? ‘Some road, you pass a mango tree, you will find a guy who repairs shoes, and then you know, right over there.’
We do not have proper locations for businesses. So how can we really support that entrepreneur? You’ll find that they’re in their silo, struggling, not getting the right support that is needed for them to grow, thrive, and really stand out. And eventually, you find them exiting.
What we tried to do is to take care of all of these things. And it’s a multi-pronged approach, all the way from the financing angle, the access to markets angle, and eventually, or finally, the enterprise development angle, which exposes them to more.
It’s really transforming a lot of the ecosystem.
I also want to talk about what Infobip is doing globally to transform African startups. I want to invite you to check out startups.infobip.com. We have Infobip Startup Tribe, a community of startups that Infobip, a global leader in omnichannel communication, recognises as the next wave to make a major impact on the world.
We’re trying to bring businesses and developers together in what is the Infobip Shift Conference, which is the largest developer event in South East Europe. We’re bringing that to Africa. It just brings the global tech community together where they can actually exchange. We have developers, software engineers, product owners, founders, startups, and all kinds of IT professionals and enthusiasts from around the world coming together. I would invite any startup listening to this to check it out.
Interested SMEs in Uganda (Central, Eastern, Western & Northern regions) that would like to be a part of the Stanbic Business Incubator program can apply here.
Got any comments, questions, or suggestions? Feel free to mail us at [email protected].
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