High Hopes in Youth Enterprise Fund

The Independent (Kampala)

Peter Nyanzi

23 June 2011

The Shs 25 billion Youth Entrepreneurship Venture Capital Fund provided under the 2011/12 budget to cure unemployment has caused excitement among young people eager to start their own businesses.

While the fund will be managed by DFCU Bank, Enterprise Uganda will support the identification of appropriate entrepreneurs and help them acquire the skills they need to succeed. Details of how the fund will be run and accessed, are yet to be developed. But Peter Nyanzi talked to Mr. Charles Ocici, executive director of Enterprise Uganda, about his thoughts on the viability of the new scheme. Excerpts:

What is your assessment of entrepreneurship in Uganda today?

It is a mixed grill. On one hand there are so many people going into business, hence Uganda being among the top three most entrepreneurial countries in the world. On the other, Uganda is No. 1 in the world in number of failed enterprises.

Yes, it has been said that most new enterprises in Uganda do not live beyond their first birthday. What are the main challenges for new entrepreneurs?

Being an entrepreneur is far more than just being registered. It takes ability to compete. The customer must be able to come back to make repeat business deals with you over and over. One must be capable of continuous risk taking, continuous learning, continuously looking for another opportunity, setting clear goals, among others.

How will the proposed Youth Entrepreneurship Venture Capital Fund work?

Venture capital typically enables a person to get start-up capital that he or he would ordinarily not be able to access from the banking system. A typical bank will not give you money if there is no collateral or fall-back position in case the business fails. But a venture fund will, as long as the entrepreneur shows self drive and is ready to get on the move. It is not a handout, but a push for someone to take off. The entrepreneur pays back the money over an agreed period, which then goes to somebody else.

Access to finance has long been a problem for Uganda’s private sector. Why are we trying venture capital schemes for the first time?

We have been experimenting: Remember Entandikwa, the Youth Entrepreneurship Scheme (YES), both of which did not perform as anticipated. Now the experimentation is over. The new scheme will work through the banking system, with DFCU Bank as a partner and Enterprise Uganda proving the capacity building support. We will be highly selective, so that beneficiaries earn the respect of the system.

How viable is this scheme in Uganda?

The key is ensuring that the money does not go to idle hands waiting for a handout. And we want people to look beyond venture capital. The scheme enables entrepreneurs to reach a stage where their business is attractive to commercial banks – sort of a bridge to your paradise.

What opportunities are available for Ugandan youth to exploit with a venture capital scheme like this?

We are talking of ventures in education, manufacturing, agro- processing, services, even trade. There are so many opportunities available.

Won’t the high mortality rate of start-ups pose a major risk?

The risk is the same everywhere. Success or failure is an integral likelihood. That is why it is called ‘venture capital’. Enterprise Uganda will offer as much support as possible right up to the grassroots, but the risk is always there. The good thing is that those that succeed become models for others to emulate.

The proposed amounts ranging from Shs100,000 to Shs 5 million appear to be targeting very small scale enterprises?

Given Uganda’s massive unemployment, you cannot imagine what difference Shs100,000 can make in helping a jobless graduate take off.

Over the past 10 years, Enterprise Uganda has been grooming entrepreneurs. What lessons have you learnt that can be useful to aspiring venture capital entrepreneurs?

Our people have many excuses. Many cite lack of enough capital, but there is never a sufficient amount of capital to be an entrepreneur. Start small and grow big. Some people want a unique business idea, yet what the market wants are creative ways of delivering solutions to ordinary problems. Others want a magical location for their business and spend too much time planning for a perfect business. But experience comes as you get moving. Others are too concerned about public opinion – ‘what people will say?’ – yet it is the end result that counts.

What more needs to be done to stimulate entrepreneurship and job creation in Uganda?

We need to change the mindset of young people; to let them understand that indeed the traits of a successful entrepreneur can be acquired. We need to celebrate success stories more. We also need to re-orient the education system to make it relevant to the needs of today which are enterprise, wealth creation, production.

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