Innovation

Why Uganda Is the World’s Most Entrepreneurial Nation

by Mark Hay

October 2, 2015
A street market in Uganda. Image by Andrew Regan via Wikimedia Commons

Over the past few years, in America, and much of the developed world, entrepreneurship has become a shiny, coveted, and almost meaningless buzzword. Wrapped up tightly with other terms overused by anyone with startup aspirations, like “disruptive innovation,” “hustler spirit,” or “pivot strategy,” entrepreneurial ventures have taken on an aura of grandiose daring and intellect, driving trendsetters to tread off the beaten path in search of glory. Maybe, the common narrative goes, they’ll even change the world in the process. Yet this image of the entrepreneur may not encompass the full or true spirit of the term, and by so doing may rob us of some understanding of the roots of enterprise and change. At least that’s what a provocative report by the Global Entrepreneurship Monitor (GEM) suggested this summer, when in a ranking the levels of entrepreneurship in 73 nations, they eschewed popularly acknowledged innovation hubs, like Silicon Valley, crowning an unsuspecting Uganda as the world’s most entrepreneurial nation.

Even within Africa, Uganda is not the first nation one might associate with the next big thing in business or technology. Traditionally, South Africa was the continent’s hotspot for makers and shakers, but in recent years all the buzz has been around start-up incubators and investment in the increasingly hopping urban centers of Nigeria and Kenya. Yet Uganda didn’t win the top entrepreneurial slot because the nation is secretly on the verge of the next big tech boom, or anything like that. It won because GEM’s evaluation used a very back-to-basics (and ultimately instructive) definition of entrepreneurship.

According to GEM, an entrepreneur is anyone who owns or co-owns a small business, which has paid its employees’ salaries for more than three months but less than three-and-a-half years. That definition will make a lot of go-getters in America bristle. Entrepreneurs here love to draw a line between small businesses that continue a tradition or tackle a local need, and their own work—which supposedly deals with the big and era defining needs and gaps in a macro society. But self-adulating self-definitions aside, GEM’s definition, if a little loose, makes a good point: Entrepreneurship is about identifying needs you can fill and taking a risk to enter the market. Newly formed small businesses, young and malleable, indicate someone jumping on an opportunity, big or small, and desperately trying to hustle and whittle their way into that niche. It may not be the best proxy, but it’s a perfectly fair metric, and a reminder of the core elements that make one an “entrepreneur.”

If you accept that GEM’s measurement system has some merit, then you have to acknowledge the bustling entrepreneurial spirit of Uganda, where 28 percent of the workforce have started their own businesses in recent years.

That percentage doesn’t necessarily represent something special in the blood of Ugandans. It represents something about the type of nations that breed old-school entrepreneurs, because none of the top ten on GEM’s list are the traditional, Western innovation powerhouses. They are, in the following order, Thailand with 16.7 percent of its workforce recently founding small businesses, Brazil with 13.8 percent, Cameroon with 13.7 percent, Vietnam with 13.3 percent, Angola with 12.4 percent, Jamaica with 11.9 percent, Botswana with 11.1 percent, Chile with 11 percent, and the Philippines with 10.5 percent—a solid bloc of developing nations. Most flashy Western powerhouses were middling by comparison: Australia came in 26th place, followed by Canada, with the United Kingdom in 37th and the United States in 41st—only 4.3 percent of the American population has recently started a small business. Meanwhile European countries like Spain with 2 percent, France with 1.7 percent, and Italy with 1.3 percent were at the bottom of the list (although Suriname was a surprising dead-last loser with 0.2 percent).

"Jackie," a Ugandan entrepreneur and clothing designer at work. Image by Joseph Balikuddembe for CIPE via Flickr

Developing nations dominated the top entrepreneurial slots, GEM suggests, because they all but have to—and that is an important insight. In America and the wider developed world, we have a plethora of large, or at least established companies, and a well-grounded economy with set career tracks, allowing us to just go with the flow into existing industries and markets. For us, founding our own company is stressful—but it’s a luxurious stress, born of passion, the lure of great wealth, or a restless refusal to bow down to the whims of any boss other than ourselves. Yet in the developing world, where weaker and less settled markets cannot route everyone into a standard job and young governments with limited funding can’t pick up the slack (if they’re even inclined to), analyzing your local or regional market, finding a space for yourself, and striking out on your own might be your only path not just to potential success, but to survival and stability.

This doesn’t mean that the worse off a country is, the more entrepreneurial it will be. Taking risks requires basic stability—and state regulatory leniency—while exploiting new niches often requires access to some novel (but often humble) resource. That’s why most of the nations that dominated the GEM list are, despite a few blips, mostly stable and up-and-coming. Entrepreneurship is a signal of a population initiating some manner of commercial revolution, using native ability on an unperturbed and open playing field to boost themselves and their nations upwards.

That’s precisely what we see in Uganda, a nation full of manpower (with the world’s largest population of under-30s, 62 to 83 percent of whom are unemployed—at least by traditional standards), stating to benefit psychologically and economically from the stability of the past three decades (after years of arbitrary, dictatorial terror), and rapidly developing communications technology resources. It’s a heartening story—and not an uncommon one in Africa, which helps to explain the continent’s GEM list dominance.

Granted, most of the entrepreneurship this climate breeds isn’t very sexy or exciting to a Western audience. Corner shops and tchotchke vendors, they’re usually just lower grade versions of the niches that for us are occupied by big box stores and wholesalers. They’re quaint, but boring.

Yet while these street stalls are a big part of Uganda’s 28 percent or Thailand’s 16.7 percent, they’re far from the total story. When you set loose a whole population and tell them that the only way to succeed is to carve out a space for themselves in the world, many of them will flood the easy targets, but that rising tide will find its way into some shocking and unexpected niches as well. In many African nations, locals are pushed to come up with some crazy-cool products that we, in a less stressed Western environment, could never have come up with, and which have a lot of appeal in local and international markets. Think Kenya and Somalia’s mobile money revolutions, which far outpaced our own, or more recent innovations like the BRCK, a genius “internet backup generator.” Even tweaks on existing technological services, re-geared towards an African environment, can create jobs and local industries, changing local markets in a big way.

In some nations, innovative entrepreneurship is more subdued than in others, due to issues like brain drain, which today sucks about 11 percent of Africa’s university graduates (usually the best and brightest) out of the continent in search of more promising markets and futures. But when a nation provides its citizens with basic support and the resources necessary to exploit an opportunity, even if some individuals still choose to leave, others will stay and enterprise on.

Stores outside of Kampala, Uganda. Image by teakwood via Flickr

For Ugandans, the presence of a solid communications network, coupled with one of Africa’s best universities, Makerere, provides some strong tools for diverse and innovative business ventures. And a number of NGO and governmental programs have picked up on the country’s pulsing entrepreneurial wave, feeding it with incentives, allowances, and awards for industry-creating or revolutionary innovations. The end result is a nation that’s been able to channel the scramble and hustle of a weak but relatively stable market into little clusters of fashion, tech, and health start-ups, some of which seem very promising and globally appealing, as well as corner stores. This mixture of resources and aid supporting its entrepreneurs has helped Kampala, Uganda’s capital, eke out a place alongside other innovation hubs on the continent, like Johannesburg, South Africa; Lagos, Nigeria; and Nairobi, Kenya—a good sign, indeed.

Uganda may not be as flashy a locale as Silicon Valley, or even non-stop Nairobi. But when you stop to think about the dynamism and potential within it, you can understand why it deserves to be called one of (if not the most) entrepreneurial nations in the world. You can also understand, when looking at Uganda, why entrepreneurship has become so rarified, statistically and conceptually, in America and the wider developed world. Entrepreneurs aren’t just those who think big, come up with a genius idea, and hustle it into our lives, as American examples might have us think. They’re those who recognize need, either within themselves or within their communities and cultures. They’re those who have a hunger and clarity beyond a simple desire to attain the social status of an entrepreneur in the Western sense of the word.

By recognizing Uganda’s hustle and flow, as GEM’s study has done, we can detect where the iron is hot, and then strike to help bridge gaps. (Perhaps by providing external loans to female Ugandan entrepreneurs, who make up 40 percent of new business operators but still have access to less than 10 percent of local credit, for example.) In so doing, we can ensure that basic small businesses prosper, along with the nation, bolstering the world at large. And we can ensure that at least some of the wide entrepreneurial spirit becomes sexy entrepreneurial innovation, creating new ideas and industries from which the entire world can benefit. That’s a powerful lesson to be learned, just by demystifying the meaning and clout of “entrepreneurship.”

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Why Uganda Is the World’s Most Entrepreneurial Nation