The startup ecosystem in Africa has until now been dominated by Nigeria, Kenya, South Africa and Egypt (the Big 4), countries that continue to receive the bulk of venture capital and other forms of investment.
However, the situation seems to be slowly changing as noteworthy startups begin to rise from other countries within the continent and investors scout for fresh opportunities to spread their risk outside the Big 4.
Uganda is one of the countries creating ripples in high-profile tech programs like the Y Combinator accelerator and Google’s $50 million Africa Investment Fund, launched in October last year targeting early- and growth-stage startups.
In December 2021, Uganda’s multi-service and digital payment technology platform SafeBoda became the first startup on the continent to receive investment from the Google fund. It has now been joined by fintech Numida, which emerged as the first startup in the country to get into YC (W22). Numida joins 14 other startups from Africa that made it to the accelerator’s winter batch, an opportunity that brings them on the radar of Silicon Valley investors.
Numida’s star has been shining since last year when it first bagged $2.3 million in seed funding. The startup offers risk-based credit to micro-businesses in Uganda and has since grown 30% month-on-month propelled by the demand for quick business loans, according to Shahid.
Numida’s credit limit is $3,500, but the amount extended to small businesses and interest rate paid is based on the risk profile of loanees. The fintech plans to enter Ghana later this year.
Beyond these two announcements, the Ugandan tech scene continues to flourish with startups emerging in the mobility, e-commerce, e-health, cleantech and fintech spaces, pulling all kinds of investors. The country was one of the top 15 in Africa that received significant equity funding last year, according to the Partech report.
In December, Tugende, an asset financier with operations in Kenya, secured a $17 million debt investment after closing a $3.6 million Series A extension round earlier in the year from notable investors like Mobility 54 Investment SAS, a corporate venture capital subsidiary of Toyota Tsusho Corporation and CFAO group. Founded in 2012 by Michael Wilkerson, Tugende’s core product is a lease-to-own plan for motorcycle taxis – a popular mode of transport in Uganda. It also provides loans to help people acquire other income-generating assets like boats, cars and retail equipment.
Also in 2021, Mobility 54 joined DOB Equity and InfraCo Africa to invest $3.4 million in electric motorcycle startup Zembo, which operates battery charging and swapping stations across Uganda’s capital, Kampala. It’s a business that seems promising as the uptake of electric motorcycles picks up in the country.
Another startup, Ensibuuko, raised $1 million in seed funding last year from FCA Investments. Founded by Gerald Otum in 2014, the startup’s proprietary digital infrastructure helps organizations like credit unions and savings groups automate their operations.
As it stands, the largest beneficiaries of this funding upsweep are in mobility and fintechs. In mobility tech, the attention has fallen on the motorcycle taxi category, a popular mode of transport in the East African country.
It is estimated that there are over 200,000 motorcycle taxis in Kampala alone – where they are used by residents to beat the perennial traffic jams. Multi-service apps like Bolt, Uber and SafeBoda are already active in the motorcycle-ride hailing and delivery market.
The e-commerce industry in Uganda is also fast-growing, with this 2021 study by the country’s ICT department indicating that revenue from the sector will double to $421 million and user penetration will hit 29.1% by 2025. Already some businesses — like SafeBoda — have amended their strategic plans to capitalize on the sector’s uptick.
SafeBoda has over the last few years changed its strategy from a single service provider to an integrated multi-service super app offering ride-hailing, online shopping delivery and payment (pay bills, send and receive money) services. The Gojek (GoTo) -backed super app, also available in Nigeria, has its eyes on other markets, too.
SafeBoda co-founder and CEO, Ricky Rapa Thomson in an interview stated that “We are building a global product that is going to go beyond East Africa”.
Meanwhile, as the Ugandan tech ecosystem comes of age, driven by the country’s youthful population and growing smartphone penetration, tens of startups across the continent have expanded into the country seeking new growth pathways.
In October last year mPharma, a e-health scaleup out of Ghana that recently raised $35 million, entered the Ugandan market after taking up a 55% stake in Vine Pharmacy, one of the biggest pharmaceutical retailers in the country. Kenyan B2B marketplaces Marketforce and Sokowatch and e-commerce platform Copia, together with Nigerian MaaS startup Treepz, have already set up operations in Kampala. A dozen others, including Kenyan logistics startup Amitruck, are also eyeing the market.
Uganda is one country to watch this year as activity resumes across all sectors, buoyed by the recent lifting of lockdowns, including the world’s longest COVID school shutdown.