Ugandan Fintechs dissatisfied over low funding by investors

By Najib Mulema

Local Financial Technologies also known as Fintechs have expressed concern over investors’ failure to inject funds into their start-ups.

Mr. Gerald Otim, the founder of Ensibuuko revealed that they have a big challenge in raising money to run their startups since some investors always turn down their business proposals citing that the Ugandan market is not large enough for sustainability.

He made the remarks on Wednesday during the FINTREK study launch at Serena Hotel Kampala.

“Our business proposals to solicit for funds are always turned down by investors who feel the Ugandan market is not large enough to achieve the expected success,” said Mr. Otim.

However, he advised local Fintechs to always get involved in assessment programs which will enable them meet appropriate investors who may be willing to support their businesses.

Mr. Otim further noted that the future of financial services in Uganda lies in Fintechs thus advising other financial service providers to start engaging them within their business model for positive results.

At the same event, Mr. Himanshu Bansal, a lead financial service consultant from Intellecap who made a presentation on Fintech ecosystem in East Africa said East Africa countries have adopted “a wait and see” approach when it comes to regulation of Fintechs. He explained that while the approach has enabled innovations, however it presents uncertainty and lack of sector direction which discourages investors.

Mr. Bansal also noted that the East Africa tech support which includes hubs, incubators and accelerators is concentrated in Nairobi while other countries in the region have very few support players which is a setback when it comes to offering generic support to Fintech start-ups.

“East Africa tech support (hubs, incubators, accelerators) is concentrated in Nairobi, ‘Africa’s Silicon Valley’. Very few ecosystem support players also exist in Uganda, Tanzania and Rwanda,” he said.

Lack of Fintech specific support means less generic support is provided to Fintech start-ups.

Mr. Bansal disclosed that, “The region has huge gaps in key Fintech talent including CTOs, data scientists and software engineers. Academic institutions are focused on theoretical rather than practical learning.”

Ms. Jacqueline Musiitwa, the Executive Director of Financial Sector Deepening Uganda (FSDU) observed that with appropriate financing and a supportive regulatory framework, Fintechs will rise and take center stage to drive Uganda’s financial sector.

“It is my strong conviction that the fledging Fintech sector will emerge to spearhead a renaissance in the financial sector in Uganda, just like Fintech elsewhere have been leading transformations within financial spaces in their respective countries,” said Ms. Musiitwa.

She said as FSDU, they will gauge financial sector growth in terms of evolution of new products and solutions which will eventually increase access to affordable financial services by a multitude.