Uganda

Social Development Enterprises and Development Organization support

Although Uganda’s Social Enterprise Ecosystem is still in its nascent stages, Social Entreprises (SEs) have emerged as a new type of startup that tackles development issues with the potential to solve sector-specific development challenges

Although Uganda’s Social Enterprise Ecosystem is still in its nascent stages, Social Entreprises (SEs) have emerged as a new type of startup that tackles development issues with the potential to solve sector-specific development challenges. In Uganda, SEs play an important role, especially in providing essential and  quality services in the energy, water and sanitation, education and health sectors. There are approximately 27,400 social enterprises operating in Uganda, employing 62,300 people directly. The table below summarises the factors that influence the enabling environment for SEs in Uganda. These factors to a great extent also shape the enabling environment for startups.

 

Financing

Strengths Weaknesses

Uganda has the second-largest impact investing market in East Africa.

There is a disparity in venture investments preferred by investors and social enterprise needs.

Impact investors and Development Finance Institutions (DFIs) invested more than $300 million and $879 million respectively in Uganda between 2004 and 2014.

High commercial debt terms with high-interest rates (19%) and collateral-to-loan requirements of 162%.

Within the energy sector, a variety of consumer finance models have been tested and provide important tools for SEs. FINCA for example, is using Stage 1 funding from USAID’s Development Innovation Venture (DIV) to boost productivity and reduce energy costs for households and businesses at the Base of the Pyramid.

Micro-financing for SEs is dominant in  agriculture, but not in-service delivery sectors.

 

Information and Networks

Strengths Weaknesses

68% of Entrepreneurs in Kampala belong to peer networks.

Business Support Organizations (BSO) are unable to provide support to rural based SEs because they lack the requisite and specialized technical capacity.

 

Additionally, the BSOs lack a national footprint, while most are located in the capital city, Kampala

 

BSOs typically do not adequately prepare social enterprises for investment.

 

Infrastructure and Human Capital 

Strengths Weaknesses

Power concessions have improved the reliability of power and lowered its cost. Tariffs have dropped to USD $0.07 for bulk supply and USD $0.14 for end users per kilowatt-hour.

Access to stable electricity is still a common challenge in both the urban and the rural areas (23% urban, 19% rural).

Growing mobile money services offer significant potential for SEs. This translates into more SEs being able to access short-term credit to meet their short-term cash needs. Also, SEs now have the capability to leverage mobile money for scaling their business models.

Competition with high wages available with donor organizations or NGOs presents a recruitment challenge for SEs.

Several universities have begun to offer degrees programs and course modules in social entrepreneurship, indicating a growing SE focus.

  

 

Policy and Regulation

Strengths Weaknesses

SEs registered as religious, charitable, or educational institutions can benefit from income tax exemptions.

There is no specific policy recognition of SEs in legal or statutory form.
 

Lack of a social enterprise body.