Agribusiness incubation in Uganda and sub Saharan Africa, the missing links
In Uganda, agribusiness – more than any other industry – has the potential to reduce poverty and drive economic growth. The agricultural sector is a major source of food supply, income and livelihood for over 70 per cent of the rural population in the country and is an important contributor to foreign exchange earnings. It remains the primary source of subsistence, employment and income for over 64 per cent of the African continent’s population. Agribusiness incubation has emerged as a critical tool that can be used to create competitive agribusinesses in Africa and to accelerate the development of the continent's agricultural sector.
A number of agribusiness incubators have been established in Africa and there are several initiatives for strengthening agribusiness education. Agribusiness incubation has proven to be a very successful mechanism for launching new enterprises, by creating an environment where start-ups can be nurtured and allowed to flourish. Experience from various agribusiness incubators especially in Asia and Africa indicates that the success rate of incubator-launched businesses is above 85 per cent (Ibid 2012). It is evident that the incubator greatly improves the chances of survival of start-up businesses during the first three years, when they are most vulnerable (Louise de Klerk- Timbali Technology Incubator).
The Consortium for Enhancing University Responsiveness to Agribusiness Development limited (CURAD) is a public-private organisation promoted by Makerere University, the National Union of Coffee Agribusinesses and Farm Enterprises (NUCAFE), and National Agricultural Research Organization (NARO). CURAD is one of the six agribusiness incubators in Africa that was formally started by the Forum for Agricultural Research in Africa (FARA) under the former UniBRAIN-DANIDA program. This is an agribusiness incubator with the aim of boosting job creation among women and youth and boosting incomes within the agricultural sector using an agro enterprise development model and graduate mindset change as key tools. CURAD is a non-profit company limited by guarantee geared towards starting and supporting profit oriented youth and women led agribusinesses. CURAD was voted the leading incubator in Africa in 2015 by the African Agribusiness Incubators Network (AAIN). CURAD has so far started, supported and nurtured 71 SME’s with over 5 technologies commercialised, 2 organization models developed and up-scaled, 189 interns, over 2000 jobs created and positively impacting over 5,000 farming households.
CURAD has successfully harnessed private sector support to expand its incubation activities, however some core gaps in the service offering that limit the flourishing of agribusiness incubation have been identified overtime and elaborated as follows.
The first key gap that has been identified in the incubation ecosystem in the country and the region is the dearth of organizations willing to support and fund start-ups and idea stage innovations. This is the riskiest part of business development, that incubation endeavours to fill, but the vast majority of development partners, equity funds and accelerators in Africa don’t have the mandates to support startups and idea stage innovators. They all look to support SME’s that have been in existence over 3-5 years with clean cashflows, established markets etc. Who is supposed to develop this deal flow? Who nurtures the youth led startup to the level where it can attract these funds? All major funds in Sub-Saharan Africa seem to be focused on the client who is already mature and ready to expand, leaving the very huge gap for 1000s of youths with energy and ideas who are willing to start such enterprises. In Uganda, kudos go to Postbank, Centenary bank, Uganda Development cooperation, Msete-UTL among others for coming out to support this noble initiative.
Government, development partners, banks and the private sector all need to support agribusiness incubators so that they can support the “deal flow” for expansion ready businesses that can be nurtured by incubation organizations like CURAD. Relying on the odd donor to start and support an incubator for a few years is not sustainable. A joint effort by all parties who get to benefit from flourishing SME’s need to invest in nurturing youth and women led start-ups, especially in agribusiness in Sub-Saharan Africa, if real change and youth job creation can be achieved.
Another key gap and fallacy in incubation that needs to be filled in Uganda and Sub- Saharan Africa is the provision of suitable production spaces/unit, greenhouse space or farmland. Agribusiness incubation is a unique type of incubation, where hot desks and work spaces common in University supported incubators in Europe and the US, are not your right incubation facility. In agribusiness incubation, there is a dire need for actual production units akin to mini factories and/or green houses or agricultural land. These are the core physical assets required in order to effectively deliver sustainable agri- enterprises. Youth Farmer innovators need the right production space to produce quality certified products that can trade locally and for export and farmer innovators need a green house or just a good piece of land to start up there enterprises. Not only are these facilities essential for nurturing a successful startup to growth, they are also crucial in generating fees to sustain the incubation activities of the incubator.
Most agri- incubators in Uganda, and their promoters, often disregard these key infrastructure needs, often modelling their set-ups on ICT- like incubation environments. The development partners normally exclude any such capital acquisitions that are hitherto crucial for incubator sustainability. Thus, despite the overwhelming demand for agribusiness incubation in Uganda, being one of the most entrepreneurial and youngest countries with one of the highest levels of unemployment, the government, private sector and development partners have not come to terms with the actual funding needs of developing sustainable incubators in the country and the region to create the much needed jobs and agro value chain development. The provision of the full Business development services (BDS) to incubatees without facilities can never yield solid results!
This blog is part of the September 2016 series on Inclusive Business Development Services, in partnership with the Inclusive Business Accelerator. Don’t miss the whole series on support available to inclusive business from practitioners, donors and intermediaries including Afrilabs, DFID, Endeva, EY and many more…
Apollo Segawa (Bsc Food Tech, Makerere Univ Ug; Mtech Food Tech, Univ of Jo'burg SA, Hons Phy; Univ of Witwatersrand)
Consortium For Enhancing Universities Responsiveness to Agribusiness Development (CURAD)
CHAIRMAN Agribusiness incubation alliance of Uganda (ABIAU)
Office: (+256) 392834425
Cell UG: (+256) 787984028
Skype; Apollo Segawa Bugembe