Why Some Startups Find it Hard to Survive in Uganda under Normal Conditions

Uganda, Moses Byaruhanga, Premier Dairies Company, Jennifer Gache

Moses Byaruhanga, a Ugandan citizen decided to venture into dairy business in 2013. Moses is a senior presidential adviser on political matters in Uganda. He, therefore, started Premier Dairies Company which sells yogurt and milk. This was good news to the locals who had always run short of fresh dairy products. The company started from scratch and now it is in a position of processing above 10,000 liters of milk daily. The success of Premier Dairies shows that Uganda is in a position to succeed in business incubation programs.

Uganda Industrial Research Institute (UIRI) played a key role in the success of the Premier Dairies. But the company is planning to now work on its own as from 2019. The company management has already applied to buy land. Their point of interest is at the Kampala Industrial Business Park in Namanve. They are planning to develop a processing plant in the area. The company has been successful which has helped it to generate profit from the sales. A portion of the profit is what they are planning to use to develop the plant. Therefore they will use $500,000 of the profit in the project and secure some loans too.

The question now is if the company will be able to run smoothly and make a profit without the help of UIRI. Uganda has a large number of entrepreneurs. But they have failed to be successful as expected which has led to the collapse of startups. UIRI only offer the startups with adequate technology, little piloting, and skills. Thereafter they are left to work independently. After UIRI has played its role it is now the role of government agencies to come in and offer financial support for their success.

Many startups have failed to be self-reliant after the withdrawal of UIRI. This came out at the meeting of East Africa’s Research and Technology organizations. Startup needs to be under incubation for at most five periods. This is according to standards set globally. But many startups get it hard to survive in Uganda after that period of incubation. The government aims at promoting startups that are able to promote exports, create jobs and increase revenue collections. Much has to take place if this has to be achieved. There is a low level of industrialization in East Africa. The East African’s industrial performance rates are above average. This is according to standards set globally. But they still trail other regional blocks like southern Africa and ECOWAS. EA manufacturing value has gone down from 5.3% between 2005 and 2010 to 4.6% between 2010 and 2015. This is according to a report by EAC Industrial Competitiveness Report. This is quite low compared to the 10% target set by EAC Industrialization Policy and Strategy.

Any startup that has passed via incubation needs adequate support for its survival. Government and private sectors must come together and support such startups. This should take place through networking, offering connection and partnerships. Supporting industrialization should not only be about gauging technology and technical processes. It should rather go beyond the two. This is according to Makerere University lecturer and economist Fred Muhumuza.

Too much-uncontrolled imports are also hindering the growth of startups in Uganda. This should be avoided in case industrialization is in the top priority of any country. This is according to a senior industrial engineer at the EAC Secretariat Jennifer Gache. Any startup must go through challenges for it to be successful. The main one is the ability to access affordable and durable loans. The interest rates placed by commercial banks are quite high for startups. Repaying that loan and running the company without cashflow problems is hard for many startups. Apart from that, the cost of operations is also high for instance the electricity cost. This makes it hard for the startup to survive. This is because they are forced to allow in the fake imports coming into the country. For this to stop Uganda must have affordable loans and electricity supplies.


What do you think?

0 points
Upvote Downvote

Total votes: 0

Upvotes: 0

Upvotes percentage: 0.000000%

Downvotes: 0

Downvotes percentage: 0.000000%

Written by Denis Opudo

Am an engineer who's a tech blogger, hit me up on [email protected] and we base our discussion on technology in Africa and the rest of the world.
Denis the Tech guru

Leave a Reply

Your email address will not be published. Required fields are marked *

Shola Akinlade,Nigeria, Truecaller, Paystack, Priyam Bose

Why We Need Truecaller Platform in Africa

Food and Agriculture Organization, Nigeria, EasyShop EasyCook, Saudat Salami

Collaborative Infrastructure is the Way Out for Nigerian SMEs