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A Different Kind of Silicon Valley: My Observations on Ugandan Entrepreneurship

When I or most anyone from the US thinks of entrepreneurship, we immediately think of the flashy tech entrepreneurs in Silicon Valley making millions of dollars a year. But, that is actually an extremely small subset of entrepreneurs. Entrepreneurship exists around the world, and I’d argue that the relatively unknown entrepreneurs that exist in developing countries are far more impressive than those who are building the next Fortune 500s out in Silicon Valley.

In Uganda, a large percentage of the population works as entrepreneurs. But the difference between Ugandan and American entrepreneurs is that Ugandans do not become entrepreneurs out of hopes of becoming the next Elon Musk or Steve Jobs. They become entrepreneurs out of necessity. And wow are the odds stacked against their success.

The US is crawling with early-stage investors looking to deploy their capital, but in Uganda, the only form of early-stage capital anyone can use to build a business must come from their own savings. Ugandan banks do not extend loans to new businesses; and even if you grow your business enough to demonstrate creditworthiness to the bank, your minimum interest rate on your loan will be 17%. People who do not have enough savings but want to open a business have to be creative: they can enter a Village Savings and Loan Association (VSLA) to apply for a loan after first saving with the VSLA or they can purchase assets like chickens to build their capital base through the sale of eggs and eventual sale of the chickens. Even if one successfully raises enough capital to launch a new business, educational inadequacies and cultural barriers further stack the odds against them.

In an economy that relies on cash and negotiations, many people do not have a complete understanding of basic financial management. Many business people do not understand the importance of selling a product at a price above what their direct materials cost, causing their businesses to perpetually operate at a loss. Furthermore, many business people do not know how to keep financial records of their transactions, making it very difficult to apply for a loan later into the business lifecycle as the business owners do not have proof of their annual revenues and expenses. Because of this, the fine line between business and personal finances for entrepreneurs is often blurred.

Uganda’s culture heavily revolves around family and community. Entrepreneurs, especially female entrepreneurs, face extreme pressures from their family members to use the income generated by the business to support their family. Families ask these entrepreneurs to use the money in their business account to pay for their families’ unrelated needs, and because the Ugandan culture heavily emphasizes the importance of supporting your family, the entrepreneurs often oblige, leaving little money remaining to reinvest into the future growth of their business. On top of the financial obstacles facing entrepreneurs who want to grow their business, there is a very steep learning curve required to grow a business beyond one single kiosk location on the side of the road or the market. Many people do not know how to grow or scale a business, so it is very common to find an entrepreneur who has had the same location for his store for the past 40 years with relatively consistent sales for all of those years. This combined impact of familial financial pressures and a lack of a formal business education makes it extremely difficult for entrepreneurs to build successful scalable businesses in Uganda.

Yet, there are entrepreneurs who exceed all odds and build very successful, scalable businesses. After numerous interviews with businesspeople, one thing is clear: to be a successful entrepreneur in Uganda, you need to be resourceful. This resourcefulness is not something people learn in school; it’s a common innate characteristic of every successful entrepreneur I spoke to. Whether it’s purchasing chickens as an asset to build your capital base or standing outside of beekeeping trainings until someone finally lets you in, successful entrepreneurs make the most of what they have. These entrepreneurs start small, with one bee hive, sewing machine, or safari van, and they use the profits produced by these assets to purchase a second, third, fourth, and so on. These entrepreneurs have learned how to scale a business against all odds, and they continue with that same work ethic and drive as their company continues to grow.

Another key component of a successful new venture in Uganda is that no components of the production process are wasted. At Dr. Emma Naluyima’s One Acre Farm, nothing is left to waste. The pig dung is used to feed the fish and the chickens, and what is left of the feed is turned into soil to be used for her crops. Everything at the farm is used the exact same way, with absolutely nothing going to waste. At Star Bees, not only do they sell honey, but they use the glue on the hive to make propolis, wax to make candles, and the honeycomb remaining after pressing the honey to make honey wine.

Despite the overwhelming barriers, these entrepreneurs have built successful, scaled businesses. I would argue that these entrepreneurs’ accomplishments are far more impressive than the hot shot tech entrepreneurs coming out of Silicon Valley. These entrepreneurs do not have access to startup capital, venture coaching, or any of the vital resources American entrepreneurs need to thrive, yet they build companies that are just as, if not more, successful all on their own.

After learning from these entrepreneurs, I kept asking myself how we can teach the girls these important lessons, as some of these traits do not seem like they can be taught in school. Even if we can help them with the initial funding for their business, how can we teach the girls how to be resourceful and clever if we can’t go visit each one of them in their local communities after they graduate. This seems like an impossible feat, but witnessing the incredible accomplishments of these successful entrepreneurs give me hope that the St. Bakhita girls can do it too if they set their mind to it.

I’ve already seen early signs of these entrepreneurial traits in some of the girls. After attending a personal and enterprise financial literacy training, Sarah stayed after to ask me more questions about the exotic poultry business she wants to open after graduation. She asked me, “What if I have like 1 million shs to start my business but I have already started and that business is not growing. What should I do to raise that business up?” Based solely on her asking this question months before graduation, I am confident that Sarah may have the resourcefulness and business understanding she needs to build a very successful business. It is our job at Notre Dame to brainstorm ways we can create more Sarahs at St. Bakhita. How can we foster a community of successful female entrepreneurs who understand the fine line between business and personal finance, who are flexible, and who can make the most of the resources they have? This is the major question I have been trying to answer over the past three weeks and will continue trying to answer. If we can find an answer to this question, maybe the next generation of Ugandans will think of our St. Bakhita graduates when they think of successful entrepreneurs.

Blog written by Grace Kamholz, NDIGI and SBVTC Fellow

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