A National Seed Fund for Ugandan Startups, An Open Letter to the Incoming Minister of Trade, Industry and Cooperatives

An Open Letter to the Incoming Minister of Trade, Industry andCooperatives
By Kennedy Muhindi

Your Excellency,
Congratulations on your appointment to lead Uganda's Ministry of Trade, Industry
and Cooperatives. You inherit both a challenge and an opportunity that could define
Uganda's economic trajectory for the next generation.
I. THE SITUATION ON THE GROUND
Uganda stands at a defining economic crossroads. Across the country, thousands of
young men and women are building ideas in technology, manufacturing, agriculture,
logistics, healthcare, creative industries and financial services. Many of these
startups possess the genuine potential to become major employers, exporters, and
industrial drivers. Yet despite this promise, one challenge continues to cripple
Uganda's entrepreneurial future: access to early-stage capital.
The numbers speak plainly. As of 2024, 16.1% of Ugandans aged 18 to 30 were
unemployed and a staggering 41% were neither in employment, education, nor
training (NEET). Uganda’s population is growing faster than its labour market. The
solution cannot be government employment alone. The solution must be enterprise.
Uganda’s startup ecosystem ranked 94th globally in 2025, behind Kenya, Nigeria,
South Africa, and Egypt, countries that have invested deliberately in their innovation
economies. Uganda attracts only 15% of East Africa’s private equity investments, the
majority of which flows to agribusiness and health while technology, manufacturing,
and deep innovation remain starved of patient capital.
Most startups still survive on bootstrapping, informal borrowing, or family support.
As of 2025, 53.8% of Ugandan startups still cite lack of capital as their
primary challenge a figure that has barely moved in five years.[4] Far too often,
our innovators are forced to surrender ownership, intellectual property, and strategic
control to external financiers simply because no structured local capital exists at the
earliest stages of growth.

II. WHAT GOVERNMENT HAS DONE AND WHERE THE GAPS
REMAIN
To be fair, Government has not ignored this sector, and your predecessor’s Ministry
deserves credit for laying foundations. The Ministry of Trade, Industry and
Cooperatives has advanced an MSME policy framework, engaged startup ecosystem
stakeholders, and partnered with JICA on acceleration programs targeting fintech,
agriculture, healthcare, and mobility. Government has also reportedly allocated over
UGX 30 billion toward innovation and startup support. Institutions such as the
Uganda Development Bank (UDB), Enterprise Uganda, Uganda Investment
Authority (UIA), and the Ministry of Science, Technology and Innovation continue to
play roles in enterprise financing.
These are important foundations. However, the gaps are structural, not cosmetic.
First, most existing financing instruments are designed for established businesses,
enterprises with collateral, audited accounts, and revenue history. A startup in its
first or second year cannot meet these requirements. Second, the UGX 30 billion
allocated historically is spread thin, underpowered, and lacks a coherent co-
investment framework that would multiply its reach. Third, Uganda still has no
dedicated, professionally managed, ring-fenced national seed fund, which is the
precise instrument that has transformed startup ecosystems in comparable
economies.
III. WHERE IT HAS WORKED: LESSONS FROM SUCCESSFUL
MODELS
History is instructive. Several countries, including some with far fewer natural
resources than Uganda, built world-class innovation economies through deliberate
state intervention in early-stage capital markets. The mechanisms varied. The
outcomes speak for themselves.
Israel: The Yozma Model (1993)
In 1993, Israel’s government launched the Yozma (Hebrew for “initiative”) program
with $100 million in public funds, using a co-investment model that matched
government capital with private venture funds at a 40% government contribution.
Before Yozma, Israel had just one active venture capital fund. Within five years, the
program attracted more than 30 foreign-based venture capital firms and caused its
own fund value to grow from $100 million to $250 million. By the early 2000s,
Israel’s VC market was entirely private-sector-driven, the government had
successfully catalysed an industry and then stepped back. Today, Israeli startups

raised over $12 billion in private funding in 2024 alone, ranking the country fifth
globally as a capital-raising hub. In 2024, Israel launched Yozma 2.0 with $155
million in government funds targeting $700 million in private commitments.
The lesson: A $100 million government investment catalysed an industry worth tens
of billions. The government did not pick winners. It created conditions for winners to
emerge.
Singapore: SPRING SEEDS and the Startup SG Framework
Singapore’s government established SPRING SEEDS Capital as the investment arm
of its enterprise development agency. Operating on a co-investment model, it
matched private angel and venture investors in early-stage startups, contributing up
to 70% of the first institutional round for technology startups and up to 85% for
deep-technology ventures through the National Research Foundation’s Technology
Incubation Scheme. The government set aside SGD 200 million (approximately USD
148 million) for the Startup SG Equity programme alone. Singapore is now the
fourth-largest startup ecosystem in Asia.
The lesson: Co-investment structures protect public funds while incentivising private
capital. Government does not need to invest alone.
Rwanda: The Rwanda Innovation Fund (RIF)
Closer to home, Rwanda in 2021 launched the Rwanda Innovation Fund (RIF) with a
$30 million loan from the African Development Bank, supplemented by
approximately $8.6 million from the Rwandan government, managed by private
fund manager Angaza Capital. The fund targets tech-enabled startups across East
Africa in health-tech, agri-tech, ed-tech, clean technology, and smart city sectors. It is
projected to create over 2,000 direct jobs and 6,000 indirect jobs over its 10-
year lifecycle. Uganda’s own neighbour has placed a bet on innovation. The
question is whether Uganda will follow or watch investment gravitate to Kigali.
IV. WHERE IT HAS FAILED: WARNINGS UGANDA MUST HEED
This letter would be incomplete without an honest account of where government-
backed startup programs have failed. The causes are consistent and preventable.
Political Patronage and Weak Governance
Across Africa, constituency development funds and government enterprise programs
have been hollowed out by patronage. Nigeria’s constituency projects have repeatedly
been exposed as slush pipelines, with the anti-corruption agency uncovering inflated

and ghost projects running into billions of naira. In Uganda, programs such as
Emyooga, designed to support youth and women entrepreneurs have reached fewer
than 1% of eligible youth according to the 2024 Census. The problem is not the
concept. The problem is governance. A National Seed Fund that becomes a political
distribution vehicle will fail.
Debt Instead of Equity
Many African government enterprise programs offer loans, not patient capital. A
startup in its first 18 months cannot begin loan repayments. Forcing early repayment
on pre-revenue enterprises does not fund innovation, it creates debt traps. The fund
must deploy convertible instruments, equity participation, and milestone-based
grants, not conventional microfinance.
Poor Selection Mechanisms
Funds that rely on political connections or bureaucratic processes rather than merit-
based, expert-panel selection consistently back the wrong enterprises. The Yozma
model succeeded partly because it was managed by professionals with private-sector
discipline, not civil servants with political mandates.
Undercapitalisation
A fund too small to matter is worse than no fund at all, it creates the appearance of
action without the substance. Israel’s Yozma started at $100 million. Rwanda’s fund
is $38.6 million. Uganda cannot launch a credible national seed facility on symbolic
allocations.
V. THE PROPOSAL: A NATIONAL STARTUP SEED FUND FOR
UGANDA
Your Excellency, Uganda needs a professionally managed National Startup Seed
Fund, dedicated specifically, exclusively and by statute to early-stage Ugandan
enterprises. The following principles should govern its design:
• Scale: Minimum capitalisation of UGX 200 billion (~USD 54 million),
structured as a 10-year vehicle with staged deployment.
• Instrument mix: Convertible grants for pre-revenue proof-of-concept;
equity co-investment for revenue-stage startups; innovation vouchers for
technical development; co-investment frameworks with private investors that
multiply government capital.
• Professional management: The fund must be managed by an independent
fund manager selected through a transparent competitive process, not a
government department. Fund managers should have demonstrated
investment experience.

• Independent oversight board: Comprising private sector leaders,
academic experts, and civil society, not dominated by serving ministers or
political appointees.
• Merit-based selection: Applications evaluated by panels of investors,
technologists, and sector experts against transparent, published criteria. No
political or regional quotas in deal selection.
• Sector focus: Agro-processing, manufacturing, clean energy, logistics and
supply chain, digital services, healthcare innovation, and export-oriented
industries, sectors capable of transforming the economy, not merely digitising
it.
• Transparency: Annual public reporting on deployments, portfolio
performance, and fund governance, audited by an independent third party,
not the Auditor General alone.
VI. THE SEED FUND ALONE IS NOT ENOUGH
A fund without a supportive ecosystem is a tree planted in concrete. The incoming
Ministry should pursue three parallel reforms alongside the seed fund:
First, accelerate the Uganda Startup Act, which has been in development for over
three years. Legal recognition for startup structures, tax incentives, and intellectual
property frameworks are the scaffolding on which a seed fund builds.
Second, mandate the Uganda Development Bank to dedicate a defined tranche not
less than 15% of its annual disbursements to innovation-stage enterprises below the
threshold typically served by conventional development finance.
Third, engage Uganda’s diaspora. An estimated 800,000 Ugandans live abroad,
representing a pool of capital, expertise, and market networks that remains largely
untapped for domestic investment. A diaspora co-investment window within the
seed fund could mobilise tens of millions in additional capital.
Fourth, consider formally requesting strategic support from the National Social Security
Fund (NSSF). With over UGX 20 trillion in assets under management, the NSSF is Uganda's
largest institutional investor, yet its portfolio remains heavily concentrated in government
securities and real estate, stable, but with limited catalytic impact on the productive economy.
A structured engagement between the Ministry and NSSF could unlock a powerful new
channel of patient capital for Uganda's innovation ecosystem.
The Ministry should explore a framework under which NSSF allocates a defined tranche not
less than 2% of its annual investable surplus into a ring-fenced innovation fund, co-managed
with private sector fund managers under clear fiduciary guidelines.

VII. THE CALL TO ACTION
Your Excellency, the incoming Ministry of Trade, Industry and Cooperatives has a
window one that may not remain open long to position Uganda as East Africa’s next
serious innovation economy. The tools are not exotic. The models exist. The evidence
is documented. What is required is political will, institutional discipline, and the
courage to design a system that privileges merit over patronage.
Uganda’s young people are talented. The market opportunities are vast. The
entrepreneurial energy across Kampala, Gulu, Mbarara, Mbale, Arua, and Jinja is
undeniable. What remains missing is a financing bridge between ideas and scalable
industries.
A country that finances its innovators builds its own future. A country that neglects
them exports its potential.
The future industrial giants of Uganda may already exist today in a shared
workspace, university laboratory, or small rented office somewhere across this
country. The question before this incoming Ministry is whether our national
financing systems will allow them to survive long enough to transform the economy.
Uganda cannot continue producing brilliant entrepreneurs only for ownership,
patents, profits, and industrial power to migrate elsewhere. The time has come to
move beyond conversations about youth unemployment and begin building systems
that empower youth enterprise at scale.
We, the entrepreneurial community, stand ready to engage, advise, and co-build. We
ask only that Government build systems worthy of our commitment.

For God and My Country.
Kennedy Muhindi
kennymuhindi@gmail.com
Kampala, Uganda | May 2026.