Experts have said despite availability of funds from venture capitalists, most Ugandan businesses are not ready to absorb these funds.
Speaking during a meeting by American Chamber of Commerce of Uganda (AmCham) for C.E.Os at Sheraton Hotel Kampala, John Businge, the country coordinator for the East Africa Venture Capital a number of businesses don’t meet the required standards to get this capital.
“There are not so many businesses in Uganda that are ready for investment where you walk into one and they are asking for $1 million and are ready to absorb it. We have a lot of investors with money but they cannot deploy it because our businesses are not investment ready,” Businge said.
He explained that many of the businesses which say they are ready for investment lack a number of requirements to absorb the funds.
“Many of their documentations are not right, their business processes are not right where they don’t keep good books of accounts among others. This is affecting businesses getting funding. We therefore have investors sitting with money that they cant deploy because the number of businesses are not ready for it.”
Businge said a lot of work needs to be done to ensure businesses are ready for funding by venture capitalists.
He said innovation hubs and business development organisations can help businesses on this, adding that this has to be done on a large scale.
Businge hailed the American Chamber of Commerce of Uganda for the role it has played in this line of ensuring businesses are ready.
“American Chamber of Commerce of Uganda has a number of companies that are helping businesses structure their funds to get incorporated to get investment ready but also get potential investors into the country. We need both the investors and investees so that the ecosystem can thrive and AmCham is helping on this by bringing technical expertise and foreign direct investments to help the sector grow.”
Humphrey Asiimwe, the CEO of the Uganda Chamber of Mines and Petroleum, underscored the need for continued investors into the country with patient capital, especially in the mining sector.
“Uganda has not done much in terms of exploration as Tanzania, DRC, Zambia, South Africa, Zimbabwe have been able to do. For mining to occur, you must have the mineral but this needs to have proven how much of it is in the ground and whether it will actually make you money. In simple terms exploration is the process of quantifying the value and commercial viability of a mineral deposit. To carry out exploration, we need investors with patient capital,” Asiimwe said.
“We are not talking about money you go to the bank and you expect to be paying the next month. Exploration takes five, 10 or even 15 years . This means you must have patient capital to fund this process but we don’t have much of it in Uganda.”
The American Chamber of Commerce of Uganda, Eve Zalwango said the platform helps promote investments between Uganda and the United States as one of the ways to strengthen relations.